Analysis 6th Jan

We analyzed a few pairs today going through the two from yesterday. Price is developing nicely on the eur/$. As i write this its testing 1.1730 that previous trend line and 78.6 fib area. From here the bearish wave will attempt to resume its trend to the downside whereas structure broadly will be attempting to establish higher-lows. These two ideas will come into conflict sooner or later and it is this conflict that might produce some opportunity for us.

The $/chf was squeezed slightly into the lows at 0.7910 where we were looking for bottoms and an s-wave. We found our bottoms but no entry pattern. In hindsight we can see across the waves moving into the trend line deceleration into the lows, an increase in volatility on the second bottom and a higher low test. In absence of structure our speculation must then rely on information pulled from volatility changes. It's a more fluid and spontaneous type of analysis that emphasises movement in the present moment; thus momentum is key. The conclusion 'trade off the lows' is bounded by momentum. The position is over when price is no longer moving off the lows. Compared to structure where price is permitted to move around in broad spaces either direction yet still carry throughout the whole pattern some underlying properties. In here we find again that common distinction that permeates life; discrete units vs a connected whole or particles vs waves.

Good Trading.