Strategic Example (EURUSD)
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Here we see two extreme price targets. The low level is set at $0.66 (September 1985). The high level is set at $1.49 (January 2015). These levels originate from the pseudo-currency ECU (European Currency Unit), which was the currency prior to the Euro launch in 1999 and was a weighted value with the Deutsche Mark as main currency, So these levels should be taken with some caution. Provided that these levels are valid, price can move beyond either level, so these Expansion Lines serve as minimum target.
We see upward potential The highest expansion line is at $1.42. However, the box under construction (currently only an orange line) tells the story that the price will move below the lowest point under the line. Currently this low target is at $0.96.
We see a lot of upwards potential, even up to $1.21 (although from the DAILY graph we know that this price target is even higher: $1.49).
This is a complex graph, which shows temporary indecision. There are 2 boxes under construction, a significant red and a significant blue. Two opposite boxes will unfold: if the red line will be met, this will point to a low price target at around $0.96. If the blue line will be met this will give an high price target of $1.00. So for now we would want to stay out of this market until the boxes are created and the market direction becomes clear. After this there will be a lot of upward movement, as can be seen by the many horizontal Expansion Lines. Price target is $1.20.
There are currently no target signals on M5.
Examining these graphs from high to lower time frames, we see an interesting future potential. Although we see a low and high target at the Daily graph, all other time frames show upward potential, even up to $1.49. We expect the following order of events:
- Based on M30, we expect a rather horizontal movement between $0.96 and $1.00. It doesn't tell us which event comes first.
- However, based on M15, we expect first an upward movement toward $1.00, after which we go down to the lower $0.96 level. So now the order of events is made clear. Price could move lower, as $0.96 is a minimum target.
- Some time after above mentioned events we expect the market to move much higher, at least above $1.42 (based on H4). We don't know yet if the target of 1.49 (based on the Daily graph) will also be met. We have to wait for confirmation at the lower time frames around that time. Potentially it could also be an event that is projected much further into the future.
- However, once price hits $1.40, we run the risk that the market will move against us, this time below $0.96. This target, based on the Daily graph is the extreme low of $0.66. As with the high mentioned in point 3 above, this could potentially be an event in the far future as well.