Friday, July 23, 2010

GBPUSD Support & Resistance Analysis


Forex Special


GBPUSD

GBPUSD Support And Resistance PowerZones

The Support and Resistance PowerZones are focused on one thing…Confluence. In the same way that a rope is made up of multiple strands for strength; the Pivotfarm Confluence PowerZones are made up of the confluence of multiple Support and Resistance methodologies including:
  • Market Profile (TPO)
  • Volume Profile
  • Elliot Wave
  • Calculated Pivots
  • Open Gaps
  • Naked VPOCs
  • VWAP
  • OHLC
  • Bank Flow (Rumours of order placement by banks)
  • Trendlines
  • Initial Balance
  • Fibonacci Retracements/Extensions & Clusters
  • Intraday/Prior day/week/month swing highs and lows
  • Moving Averages
The depth of analysis and confluence required to form our PowerZones puts the probability of price stopping and reversing heavily on our side. For example if there was a PowerZone (USDJPY) with a Volume Profile peak at 1.2680, an Elliot Wave ending at 1.2677, a Fibonacci cluster from 1.2675-1.2680 and also a prior day high at 1.2683. What do you think are the chances of price stopping and reversing here? The answer is very high! One of the main reasons is visibility; this PowerZone is combining methods used by at least 4 different groups of traders. There are more eyes on this area and thus it is likely to be a significantly liquid and highly probable area for price reversal.
A Statistical Edge
If combining all these methods into a Support and Resistance soup wasn’t enough we go one huge step further. A great deal of our research time is spent in statistical back testing, to help us gauge which methods to give more weight to at any given point in time. Say the market is in a trending phase our statistical testing may indicate that Volume Profile levels tend to outperform other methods. During this phase the Volume Profile Support and Resistance method will have more weight in our analysis. We pay more attention to some methodologies than others, based upon the short, medium and long term performance statistics of that method in specific market environments.
At Pivotfarm our mission is to create Support and Resistance levels that are based upon the confluence of multiple high probability methods. We then combine these methods with thorough statistical analysis to create Support and Resistance levels that are consistently evolving with the market environment. The comprehensive and unique nature of our research will give you the edge to perform in any market.

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