Saturday, March 30, 2019

IMA S.p.A. : high wave pattern.

With regard to the chart of IMA, we can notice a high wave pattern. 
It is a particular candlestick pattern that underlines the market indecision. In this way, after the full year 2018 data release, and after a bullish trend, with the break of the previous congestion area, the bullish trend stopped. The market maker is evaluating the situation.
Indeed, the buyers, at the closing, left (the long upper shadow of the candle changed into a small real body). In the same way, the sellers left, for the reason that the long lower shadow changed into a small real body: there was strong volatility with a rebalancing of the positions sellers-buyers. 
See the following chart and the pattern. 

Chart from Investing.com

The upper and lower shadow represent respectively the resistance and the support area.
The market will make a decision when there will be a break of the support or of the resistance line.
As usual, we need other confirmations. In this sense, it is useful to check the pattern requirements.
In the high wave pattern, there are some conditions : 
  • A small real body ;
  • A long upper shadow ;
  • A long lower shadow ;
  • The length of the upper/lower shadow should be three times the real body.
With regard to the last one, we can observe that :
  •  O (open) - C (close) = small real body = 66.60 - 66.25 = 0.35
  •  H (high) - O (open) = long upper shadow = 68.50 - 66.60 = 1.90
  •  C (close) - L (low) = long lower shadow = 66.25 - 62.80 = 3.45
The pattern requirements are met because :
  • 1.90/0.35 = 5.43
  • 3.45/0.35 = 9.86
Finally, let's look at the market mood and at the next trading sessions, to understand the intentions of the market players. For greater clarity, the following image shows what I explained before.

High wave pattern

Saturday, March 9, 2019

EUR/JPY : test of the supports.

At a glance, with a daily timeframe, we can notice that the cross broke the previous support (see the yellow ellipses). The support is composed of two bottoms. 
The two bottoms represent also a past resistance that was broken by the cross with a bullish candle, on July 2017. The trend is bearish, highlighted by a red candle. There is a rejection from 127.62.
The downtrend is confirmed also by the bearish trendlines (see the second chart). 
However, in the short-term, the is a test of the bullish trendline. 
In this way, it needs other confirmations, to set up a short strategy. Let's look at the next trading sessions. If the bearish trend will be confirmed also in the short-term, the cross could test 122.68, the gap up and then 115,22 (see the trendlines). 

Chart from Investing.com
Chart from Investing.com

With a closer look, the situation is the same: the bearish trend, the price levels highlighted by the yellow ellipses, a red candle that brokes the support, a test of the bullish trendline. 
We can notice also the EMA cross (20, 100). The last one represents a sell signal that must be confirmed for the above reasons. 

Chart from Investing.com
Chart from Investing.com

To conclude, for a valid short strategy, we need more information provided by the technical indicators. Otherwise,  the last red candle could represent only a volatility exhaust and a rebound of the cross. For this purpose, look at the BB and at the green arrow. The cross is testing the supports in the short-term, even if the trend is bearish in the long-term.

Chart from Investing.com

Thursday, February 21, 2019

GBP/USD : chart framework.

At a glance, we can notice some price levels. The last trend is bullish (confirmed also by the green candle), from 1.24 (see the bullish trendline). 
There is a support at about 1.249 and another at about 1.27. This last one is important due to the fact that previously, it represented a resistance (in the year 2017). 
Another price level is 1.32 : it is a resistance touched by the currency cross on October 2018 and in the year 2019 ; this resistance was touched also in the year 2017. 
See the following chart, to better understand the framework. 

Chart from Investing.com

The FIBO retracements are very useful in order to fix target prices. The price level at 1.32 is far important. It represents the 50% FIBO level and the watershed between a bullish continuation (with the break of the upward resistance) and a bearish signal (reversal with the repulsion of the mentioned resistance). 
Of course, to get a valid signal, we need more considerations. However, the price levels are pretty clear to set up a trading strategy. 

Chart from Investing.com

With a closer look, the situation is the same. The long candle is bullish and other indicators seem to confirm the uptrend : the crossover of the stochastics ; the intersections of the EMA bundle (10, 20, 50)  and the crossover of MACD and MOMENTUM (see the previous chart). 

Chart from Investing.com

With the last trading sessions, the bullish signal of the green candle would seem muffled (due to the shadows of the red candles, circled area). Anyway, let's look at the updates. 

Chart from Investing.com