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TraderFx
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I am a full time forex trader, primarily trading currencies. My trades are 90% based on technical analysis and price action.
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Wolfe Wave Analysis
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  • Salesforce.com - Beware The Wolfe

    As the US Markets are set to open after the labor day weekend, I stumbled upon some chatter on Salesforce.com (NYSE:CRM). Currently at $49.13 at the time of writing, the stock is up 12% after last week's earnings release. The general consensus being a revised upward outlook or a Hold strategy for all the buys.

    From a purely short term technical analysis Salesforce.com chart does show some interesting key price points to pay attention to and is likely to appeal to both the bulls and bears.

    Bearish Wolfe Wave

    The daily charts show a bearish Wolfe wave being formed with the possible downside price target coming in at $40.42 with an estimated time around the 30th of September (end of this month).

    (click to enlarge)Wolfe Waves - Salesforce.com

    Current price action is playing out near the parallel (TL2-4) projection line. A daily candle's close above this trendline (above $48.77) would serve as a warning to let go of any bearish intentions to short sell this stock (at least for the moment).

    A daily candle's closing price above $48.77 would signal a continuation of the current bullish trend.

    On the other hand, if this projected parallel trendline does manage to hold would keep us in line for a possible short term short selling opportunity (possibly towards the target region of $40.42), which brings us to the question of where to enter a short position.

    To answer this question, I introduce my own method to ascertain a confirmed change of direction by making use of Median Lines. By projecting the median line in the direction of current price action it gives a more clear indication of a possible move away from the trend (when price moves away from the Median Line).

    What's important to note is that as long as price continues within the outer median lines there is nothing much for the bears to do. However a short selling opportunity can be identified when price shows signs of exhaustion near the median line followed by consecutive closes below the median line with possible move away and out of the lower median line. Refer to the chart below for the illustration.

    (click to enlarge)Salesforce.com - Short Selling Idea

    In such a case, the stops for the interim short sell trade would be taken at the most recent significant peak with the target level set to or close to $40.42.

    One must however remember that Salesforce.com is in a continued uptrend and thus any drop in price to the downside is most likely to be a correction, in which case the above analysis can be used to buy into the dips around the level of $40/41.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: CRM
    Sep 03 8:53 AM | Link | Comment!
  • Amazon - To Buy Or To Sell

    Amazon's stock has been historically the most bullish during the periods of Q3/Q4 in the past couple of years. However it isn't set in stone as past data shows and one which we can see during the current price action.

    As we are currently in the midst of Q3 and Q4 just around the corner, it would be wise for the investors to keep an eye out on Amazon. Buying the stock into Q4 usually results in a late entry, with most of the bullish move happening towards the mid-end of Q3. In this article, we'll take a look at Amazon's stock price from a technical perspective.

    The chart below represents Amazon on a quarterly basis. Notice how the steep uptrend has been in place since Q3, 2008 and has been well respected, considering that the upward trendline has been tested thrice.

    (click to enlarge)Amazon - 3Month Chart

    The obvious question from this chart that comes to mind is should Amazon be a BUY or a SELL and what would be the price objectives respectively.

    In order to answer the above question, we need to first mark a few milestones.

    Remember that Amazon recently made a high earlier in July this year at $314.

    If Amazon was going to be a SELL, in the 3 month chart, the current candle should ideally be closing as a reversal day. So far, what we have is a new high being made and price is currently trending downwards. In the event that Amazon's price closes lower than $246, all bets would be off on going Long on Amazon. This would be our first indication that probably the bull run is showing signs of exhaustion. On the same note, should the trendline hold the current rally, we would need to look for further confirmation before setting out a convincing BUY.

    (click to enlarge)Amazon - Monthly Chart

    On the Monthly charts, we get a better perspective of price action. From a quick glance we notice that the most immediate price target would be in the region of $263 - $266. A break below this region could see a test of the main trendline with price regions of $234 - $240.

    We also notice a region of resistance turned support around $269.25. This leads us to believe that in the event the price continues to fall, the support level is most likely going to be tested. A new monthly open below this price point could possibly ring the alarm bells for the bulls.

    Switching to a weekly chart and plotting the Median Lines from the secondary trendline, we find some interesting price levels to watch.

    (click to enlarge)Amazon - Weekly Chart

    Firstly, we see that price failed to reach the median line, which is an indication of a possible change in trend, but not necessarily a change in trend direction. By combining the information we get from the quarterly and monthly charts, we can now state that Amazon is currently undergoing a price correction. The weekly chart gives us the price points of $284.73 (which is where the current price rests at) and $245.79 being the next potential target.

    As mentioned earlier, an open below the $266 region could well see the $240 - $245 levels being tested which would again require a break above $266 region in order to initiate long positions.

    From the above analysis, we can thus conclude that the price region of $265 - $260 will be a key level to watch as the tide could turn either ways. It would be worthwhile to keep an eye out on the quarterly chart to see how the candle closes, which could give an early indication should the bullish trend in Amazon give hints of a possible change in trend.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: AMZN, q4, amazon
    Aug 19 11:59 PM | Link | Comment!
  • Playing The USDCAD (Short)

    The daily charts for USDCAD paint an interesting picture from a Wolfe Wave perspective. If going by the current conditions, (a strong Greenback), the USDCAD seems to have run its course with a possible decline (and one that is large) seems to be just around the corner.

    In order to understand this, let's take a look at some charts.

    In the first chart below, we have a bullish Wolfe Wave formed, which shows that it is failing. By failing, there are two points to consider.

    (click to enlarge)USDCAD - Bullish Failed Wolfe wave, Daily Charts

    1) Price failed to reach its projected estimate of 1.13007 around the estimated time of 18th February 2013.

    2) We can see that price struggled quite a bit to firstly reach the first target of 1.04365 (Point 4 on the WW triangle)

    From the looks of it, we can expect to see exhaustion near the price point of 1.06601. If we extend the line from Point 1 (Wolfe Wave) back in time, we see that this price point is in the region of a strong resistance.

    (click to enlarge)USDCAD - Resistance ZoneWhile it has acted as support, we can notice that the price region shows more strength as resistance rather than support. In three instances in the past, we notice price being contained within 1.06601 - 1.08569.

    So if our bullish wolfe wave does have some more strength left, we could see a test of 1.08569 expecting price to fall from this region.

    Now to the interesting part....

    (click to enlarge)USDCAD - Bearish Wolfe Wave Formation

    We have a bearish wolfe wave formation (illustrated by a Grey triangle with projections). Price is currently hovering near the upper parallel line showing us a resistance region. While this line is not set in stone, we have seen in the past, price cut through this limitation line and in most cases, notice price consolidation around the region.

    As such, this gives us the conviction that USDCAD could possibly be ranging between 1.04365 - 1.06601 - 1.08569.

    From these three levels, a preferred entry to short this pair is most likely 1.06601 (but should be done on the way back). In other words, waiting for a breach of 1.06601 and then shorting the pair after it moved a few pips above would be ideal, with stops set around 1.08569.

    On the way back down, our projected price 0.98084 to be reached around 18th of October. But knowing how the pair failed to reach the previous bullish wolfe wave, it would be fair to apply caution and expect the same. So the obvious question would be, what should the targets be?

    As pointed out on the chart, there are three key price points to consider.

    Target 1 @ 1.02126 is the apex of the bullish triangle which is a price point where prices are likely to react.

    Target 2 @ 1.00088 is the point 4 of the bearish wolfe wave

    Target 3 @ 0.90084 is the final price projection.

    Playing the USDCAD

    (click to enlarge)USDCAD - Trade Plan

    Entering short around the region of 1.06601 with stops at 1.08569 (+some pips) would the initial game plan. [If price fails to reach 1.06601, then we short at 1.04365] Once price moves closer to and hits Target 1, closing 1/3rd of the trade with stops moving to break-even would ensure us some small gains. At target 2, we close out 2/3rd of the trade, with stops moved to 1.04365 would put us in a risk free trade.

    The final leg of the trade would mean, moving our stops to T1 in hopes that price could be reached.

    To conclude, USDCAD has seen some bullish moves for most part of this year. What gives me the conviction that a bear rally is around the corner is by looking to the weekly charts, which has a classic bearish Wolfe Wave pattern being set up.

    (click to enlarge)USDCAD - Weekly Charts, Bearish Wolfe Wave FormationWhat's even more interesting is the price projection and time. We expect USDCAD to drop to 0.816 region confirming a continued bearish selloff that is likely to extend well into early-mid 2015.

    For the moment, we expect to see the upside moves contained within the ranges of 1.08514 - 1.06553.

    The formation of another Wolfe Wave within the weekly charts gives some kind of confirmation that the bull rally is nearing exhaustion.

    Tags: forex, loonie, usdcad
    Jul 07 8:20 AM | Link | Comment!
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