4H downtrend in AUDUSD possibly nearing completion
Updated
We are tracking two counting processes in this analysis: Prime & Cycle. The first is easiest to understand. We simply select a window that starts at the absolute top/bottom of the trend, and ends after the first fractured pullback ("FCT") completes. As you can see from the green label at the high, we can derive three numbers from this count. In this case they are: 16/14-8 (the 8 can reduce to 4 and 2 since all of these are even, but let's keep it simple and focus on the three...). The 16 is called the 'high prime,' the 14 is the 'low prime,' and 8 is our 'half prime.' The prime values imply that the market mind will use these to end the trend at a point where these values also line up with other processes... As you can see we're projecting a turn based on our half prime of 8 counted from the rightmost edge of the selection window.
The second process involved is the Cycle. The Cycle is a 2/4/6 count that skips FCT terminals (most of the time). Actually, in this sequence, the terminals are counted since the low terminal at point 11 appears above the trend low at point 9. This is one of two situations we call a 'count-through.' So the first Cycle ends at the bolded 6 label. The second ends at, and lines up with, our half prime count of 8. What indications do we have that the Cycle will end there? Notice the DMC (Double Marked Candle) at point 6. This is a signal that can point either to A) the end of a Cycle (since cycles end at 6) or B) a 6-count to follow the end of a cycle. In this case, either A or B is a possibility. If A plays out we end at our half prime, and if B, we end at our low prime of 14.
Please note that the projection implies a new and final absolute low after our counts of 6 and 8 are hit...
For me personally, I would attempt to trade both situations. If I stop out on the half prime entry, it only makes the low prime entry more viable...
This downtrend from the .65220 high also ties into the 1D time frame where an 'all primes' count ended at .61702 on Thursday, Oct. 13. So I don't think that low will be breached by this 4H trend. We should see new highs in the daily chart in the upcoming weeks (if the 'all primes' count holds)...
As for stops and profit targets... I usually oscillate between a conservative and aggressive ATR based trailing stop, in this case it would start at the absolute low of the 4H trend. I don't use targets much because they are often arbitrary. There is no possible way of knowing what the next trend will look like before it happens... Even with all the above rules, markets have an extremely wide range of legit behaviors. The projection shown here is based on a relatively mature trend, not to say that it can't extend beyond what we expect, but after the first and/or second FCT forms, we've pretty much got all the info we need to make a good educated guess...
Let's see how this plays out... enjoy! /r
The second process involved is the Cycle. The Cycle is a 2/4/6 count that skips FCT terminals (most of the time). Actually, in this sequence, the terminals are counted since the low terminal at point 11 appears above the trend low at point 9. This is one of two situations we call a 'count-through.' So the first Cycle ends at the bolded 6 label. The second ends at, and lines up with, our half prime count of 8. What indications do we have that the Cycle will end there? Notice the DMC (Double Marked Candle) at point 6. This is a signal that can point either to A) the end of a Cycle (since cycles end at 6) or B) a 6-count to follow the end of a cycle. In this case, either A or B is a possibility. If A plays out we end at our half prime, and if B, we end at our low prime of 14.
Please note that the projection implies a new and final absolute low after our counts of 6 and 8 are hit...
For me personally, I would attempt to trade both situations. If I stop out on the half prime entry, it only makes the low prime entry more viable...
This downtrend from the .65220 high also ties into the 1D time frame where an 'all primes' count ended at .61702 on Thursday, Oct. 13. So I don't think that low will be breached by this 4H trend. We should see new highs in the daily chart in the upcoming weeks (if the 'all primes' count holds)...
As for stops and profit targets... I usually oscillate between a conservative and aggressive ATR based trailing stop, in this case it would start at the absolute low of the 4H trend. I don't use targets much because they are often arbitrary. There is no possible way of knowing what the next trend will look like before it happens... Even with all the above rules, markets have an extremely wide range of legit behaviors. The projection shown here is based on a relatively mature trend, not to say that it can't extend beyond what we expect, but after the first and/or second FCT forms, we've pretty much got all the info we need to make a good educated guess...
Let's see how this plays out... enjoy! /r
Note
Although the 'future' pane above doesn't show it, because it doesn't apply the indicators to that movement, we now have a DMC at point 22, which is a 6-count from our FCT at point 16 just the same as the first DMC is a 6-count from trend start. I consider this signal more evidence that we will likely see a trend turn from our half prime count of 8 (not 14 as posited in our B scenario above)...Order cancelled
Looks like it beat us to the punch and turned at a 4-count from the FCT. That's half of the half prime of 8 - I usually don't follow the derivatives because it complicates things, but a low or high prime of 16 will always reduce to 8-4-2 since half primes are based on even numbered results of dividing the main primes by 2. All counts in the framework I use are based on an even numbered Fib set that starts with 2, 4, 6 - where each value is exactly double the standard Fib set...
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.