TMS Observed, Pounced & Nailed it...
Last week whilst observing the markets one thing was crystal clear - a move was setting up which was not going to be the 'real' move:
Last week's recap
The FOMC decision produced some 'real' moves today but in what context?
- They were not 'real' moves in terms of the size of movements seen in markets such as the Dow Jones & the Euro vs. Dollar.
- They were not 'real' moves in reference to the volatility produced in major markets
- They were not 'real' moves in terms of the directional closes for these markets
- They will be seen as the real moves in reference to our technical analysis chart anticipations
- They will be seen as real moves in terms of breakout fake outs as per price action
- They could be seen as the real moves that 'ignite' the declines which will follow on soon
It is now apparent that the real moves for many markets are actually emerging as declines, especially for the Forex markets.
At TMS we envisaged a new high for the Euro and co in which the perfect opportunity would translate into a shorting opportunity not a buying one. So last week our TMS system triggered two shorts for the Euro.
- 14050
- 14280
The Euro started its decline on Friday with a cheeky close above the psychological 140 level. Over the weekend update the following chart made one thing apparent to us:
From Thursday highs a move of over 200 points has occurred to the downside in which the Euro has barely managed to close above 140 this week. The price action halted at the yellow trend line above and should this yellow circled area break next week we would expect the decline to double to the red base line.
Note in our previous article we showed the indicator below was stating a total sell as the price moved to overly extended levels and an elastic effect was inevitable.
A snap of the red base line will complete the upside recent probes and will slide prices towards 132.
Yes it was inevitable that the yellow line would be king in which the decline would double south and now significant action is taking place as a result and the Euro is showing signs of vulnerability.
Is the Downside Completed?
Far from it! The downside may well have just begun! We stuck our heads out and when everyone looked up we looked down. Perhaps it would be fitting to say 'we told you so'. At this moment in time the next session, Wednesdays session is absolutely crucial.
The chart above is a four hour chart and shows the entire move up from 126. The Euro's been close enough to snapping to the downside over the past month but the sideways action was making it apparent that the market was simply setting up a trap rather than a blow off! So we got this new recent high and now we're over 500 points south from the high!
Absolutely Crucial for the Bulls
The Euro needs to regain the circled area and it needs to regain it quick. Failure to do so will result in a move to 136 and snapping that will certainly open the doors to 132. The next few sessions will inform us of the severity of this current decline.
Regaining the yellow circled area (the lower range channel of the past month) will set up a move to 140 in which the pivot line comes into play again. The next 24hours should be critical enough for traders to decide if the whole are of downside comes into play AND if it does the market has significant chances of wiping out the entire rise from September!
The Sterling way!
Our TMS system triggered a short last week at 16297 in which members are feeling rather cheeky about it now!
We have also kept traders on the ball this week with our new intra charts updates which identify key moves virtually before they are set to occur.
This chart was analyzed yesterday for the GBP.USD and here's why it was important:
A move with conviction either side of the blue pivot line was how the next big move was going to emerge. Having shorted via the TMS system at 16297 we remained short but continued to monitor the shorter term intraday moves.
The market started to back away but later decided to test the pivot line. No real convictional move was occurring and the downside sell was obvious after the blue pivot line was broken to the downside.
Over the two previous charts we warned members how the GBP.USD is likely to slide lower to the red downward sloping inner trend line but with the chart above we gave another sell indication for those that missed out as we brought into play the intersecting yellow trend line. TMS informed that a snap of this yellow line would cause the price to slide to the yellow line.
The price in real time at the time of writing - GBP.USD Hourly
As you can see from the chart above the price pierced the yellow line and slid further down to touch our inner red downward trend line.
Critical time
The next 24hours will be crucial for the Sterling as well. The key is to gain the yellow line in which price will have another chance to travel back to 16150. Failing at this point will result in a roll back of the current decline in which the red inner trend line will be hit again and the green intersecting support line will also be hit.
The price of the Sterling can therefore easily move towards 159 and 158 if the yellow line is not regained soon.
Volatility is stepping up
Currencies are now backing off against the dollar and Gold has also pegged back from its high made in Tuesday's session. Silver was the best sell of the day in which price tumbled 300 odd points from its highs made. For now stock markets remain stubbornly higher although backing off somewhat. Something doesn't seem right and it seems likely that a trend change for many markets is taking place or about to take place. If you can't see it simply make sure your longs have seatbelts on as downside risks remain all over.
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