USDCHF Monthly Chart Well Extended from 5-EMA

The attached monthly chart of the USDCHF has plotted a 5-EMA along with yellow squares surrounding monthly price bars that failed to touch the 5-EMA. Bear in mind that the most recent price bar is in progress with the 5-EMA currently at 8570’s (subject to change by end of July).

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Currency Pairs that are far away from their Monthly 5-EMA

Having a look at some forex pairs, there are pairs that have run quite a bit, so much that price has extended away from the 5-EMA by quite a few pips. This is an interesting market condition because in general, most forex pairs will at some point during the month come into contact with the  5-EMA on the monthly time frame (I estimate about 75% of the time). Obviously when a currency pair is trending very sharply it will sustain the kind of momentum that extends price away from the 5-EMA on the monthly and does not touch it. However, this condition of not touching the 5-EMA usually struggles to persist for an reasonable amount of time.

Here are some interesting currency pairs showing this dynamic

·         USDCHF has not touched the July monthly 5-EMA (0.8571) and it did not touch the 5-EMA during June. In the last couple of years, the USDCHF has had a few instances where it went 2 months in a row without touching the 5-EMA. One of those instances preceded a sharp upward reversal: October-November of 2009 failed to touch the 5-EMA and preceded a multi-month >1500-pip rally in USDCHF.

·         GBPCHF has not touched the July monthly 5-EMA (1.3866) and it did not touch the 5-EMA during June. The monthly chart has dropped about 11,800 pips in the last 3 years…..enough said.

Does it mean that these pairs are set to reverse any time soon?

No “signal” or technical condition guarantees success 100% of the time, but if you are trying to assign odds to the situation, it’s likely that the odds of a +1000-pip bounce are edging ahead of the odds of a -1000-pip tank from where the prices currently stand. Big downtrends can reverse quite suddenly and quite violently, a look at the monthly charts of AUDUSD and NZDUSD during late 2008 show that when a monthly price bar prints without touching the 5-EMA, the coming months can get quite hairy, planting the seeds for a sharp reversal

DIBS Forex Chart Book For the Week Ended June 24th 2011

The latest chart book showing some recent DIBS charts for a few Forex pairs is available. This week the book features EURUSD, GBPUSD, USDCHF and has also included EURJPY, EURCHF and GBPCHF.

Enjoy!

DIBS Chart Book – Week Ended June 10th

The latest DIBS chart book with a review of some of the inside bar breakouts on the charts for the week ended June 10th has been posted. Enjoy!

USDCHF Rips a DIBS on BOE/ECB Day

On a day when the newsflow calendar is focused on the GBPUSD and the BOE update (12 noon UK Time) and the EURUSD and the ECB update (12:45 UK time and press conference later in the day), the good old USDCHF stages a breakout from consolidation by breaking up through a DIBS signal bar.

DIBS signal a way of triggering a consolidation breakout: USDCHF’s DIBS bare was a nice one at 15pips of range with a low-spike on it, it was preceded by a few spiking candles showing that bears were getting rejected. Interesting to see how in a trading session characterised by some rangebound pre-news anticipation action in the EURUSD and GBPUSD, the USDCHF staged a solid breakout from consolidation. The initial 40-pip pop on the hourly bar is pretty solid in the context of the 15-pip DIBS signal and in the context of USDCHF’s average daily range stats (USDCHF ranges on average 90-100pips a day per www.mataf.net). Given the DIBS is a breakout trade it’s important to try and go for winners that are multiples of the pips being risked so that when the market is in chop mode the DIBS triggers will get banged up a bit.

Other CHF pairs showed DIBS clues as well: A good tip sometimes is to track a few pairs on the same cross to see if they print a DIBS candle simultaneously. In the case of today’s USDCHF DIBS on the 1H chart, there was a DIBS that signalled on the GBPCHF 1H chart and on the EURCHF M30 charts at roughly the same time.

It’s a Thursday and there is scheduled newsflow: it’s not entirely surprising when a DIBS works out decently on a Thursday. I find Thursdays can often be decent trending days, helped by the fact there tend to be important scheduled news releases that can get the market to be eager to anticipate news or set it up to produce a reaction with some good follow through to it. For the GBPUSD and EURUSD, the “interest-rate decision Thursdays” sometimes produce a good DIBS signal AFTER the news has been released.

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DIBS Forex Trading Method E-book Now Available

It’s taken a while but I’ve gotten around to posting an e-book that profiles the DIBS Trading Method, you can find it on this blog by clicking on the “Forex Factory 4 Numpties Volume 1” link above or by clicking on this link:

http://wp.me/P1stdh-1v

The DIBS E-book gives an outline of the DIBS trading method that is profiled on blog posts and in the weekly DIBS chart books that I post on scribd.com.

I hope you enjoy the read and make use of it by crushing a few pips!

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