Sunday, November 30, 2008

How did the candles do last week?

We had two calls last week, one on usd/jpy and the other on usd/chf. the candles were bullish on the dollar against the franc. For a while it looked like they were going to be very wrong but as the week progressed the dollar strengthened and the pair closed the week 79 pips down. Still, the candles did give a wrong call with a forecast rating of -0.65%.
Meanwhile the yen was stuck in a range. The candles had been bearish on the dollar aginst the yen. They were right but only to the tune of 32 pips, giving a forecast rating of +0.34%

This gives us the sum toatal for the week of -0.31% and an overall running total of +9.24.
The candles continue to keep their cards close to their chests and there's only one clear signal this week, on gbp/usd. I'll write that up and give my take on the candles for the other majors tomorrow.

Until then, have a good one.

Monday, November 24, 2008

forecast for week Nov 24-28 (calls on the yen and the swissy)

eur/usd 17-21 nov. the nut tightens and the tension mounts as the week forms another doji inside the range of the previous week. I'm still waiting for a clean breakout, now of either 1.30 on the upside or 1.24 on the downside.

forecast: the candles remind us of the virtues of patience

usd/jpy 17-21 nov. a beautiful black doji with lower highs and lows than last week's candle suggests a bearish sentiment is in order. it must be bourne in mind that the last bullish week (4 weeks ago) came on hints that the bank of japan was ready to weaken the yen if they saw fit. support: 92.50 resistance: 97.70

forecast: the japanese candles say that the yen should strengthen but the japanese central bank may disagree

gbp/usd 17-21 nov. This inverted hammer is a weak bullish signal and sterling's inability to close last week above 1.50 makes it weaker still. An inverted hammer always needs confirmation (higher volumes on up moves or divergence from stochastic) as well as a clean break out of 1.50. Cable will find support at 1.4550 and resistance after 1.50 at 1.5250.

forecast: will cable rise or will cable fall? we must wait, for only time will tell

usd/chf 17-21 nov. A long white as the SNB cut and usd powered through 1.20. Those long shadows do make one pause for thought, but this is a bullish candle. Support at 1.1880 and resistance at 1.25.

forecast: the candles echo the swiss national bank when they say buy the greenback.

Saturday, November 22, 2008

How did they do?

We didn't have much riding on last week's moves as the candles only made one call: bearish on cable (gbp/usd).
That one turned out none too well but it could've been worse. Sterling pushed hard against our resistance at 1.50 and got as far as 1.5250 on Wednesday. However, risk aversion came to our aid and cable closed the week below 1.50 at 1.4866. Therefore price moved 213 pips against us which gives us a forecast rating of -1.43%. The running total is now +9.55%

Quick round up on the rest:

eur/usd: Support held at 1.25 for the fifth week running with little price change over the week.
usd/jpy: very similar picture with the yen with support being tested and holding at 94.
usd/chf The Swiss National bank caught us on the hop with their shock rate cut pumping the swissie through 1.22 and a tasty 243-pip continuation of the current up trend.

Monday, November 17, 2008

forecast for week Nov 17 - 21

looks like a week when the candles are generally advising a wait-and-see approach with only sterling offering a decent opening...

eur/usd 10-14 nov. a black spinning top with a bullish shadow spelling a third week of uncertainty for this most technical of pairs. Support at 1.25 continues to hold and I'd be looking for a breakdown of that before getting bearish. As far as the bulls go, wait for a close above 1.31 (at the very least) before risking Pamplona.

forecast: the candles are home, home in a range so you'll need to make your money in the channel. The eventual breakout, whether up or down, should be well worth the wait, mind.

usd/jpy 10-14 nov. At the bottom of a move this would be a hammer BUT it is in the second candle of consolidation after the failed piercing lines of 3-4 weeks ago. A white body would have given a slightly more bullish tone but as it is we are still waiting for direction on the yen. Support at 94 and resistance at 100.

forecast: the candles say that all things come to those that wait.

gbp/usd 10-14 nov. This long black continues a vigorous down move and closed below 1.50 to suggest there's more sterling weakness to come. Resistance at 1.50 with support at 1.42

forecast: if 1.50 holds, there's more downside to be found in the british pound.

usd/chf 10-14 nov. This long-ish white is a non-descript candle with its upper shadow mitigating any bullish promise. This shadow is also testing significant resistance at 1.20 and we see support coming around 1.1750.

forecast: the candles say sit this one out

Saturday, November 15, 2008

How did the candles do last week?

3 sound calls gives us a weekly forecast rating of +8.85%. That's two good weeks in a row and a running total of +10.98% : better than keeping your money in the bank, no danger!

Here's how last week's forecast breaks down:
eur/usd:The candles held true. Price fell as low as 1.2387 before recovering to close at 1.2688, bringing a weekly fall of just 112 pips. This gives us a faorecast rating of +0.88%
usd/jpy: The candles signalled uncertainty and we sat on the fence. The dollar fell 204 pips against the yen and support at 95.50 held and the pair closed at 97.06. We missed out but its better to be outside of a good position looking in than inside a bad position looking out.
gbp/usd: the candles said sterling was going to slide and it certainly did. gbp/usd opened at 1.5770, falling as low as 1.4555 before recovering to 1.4797. That's a fall of 973 pips - serious fallage! Forecast rating: +6.57%
forecast: the candles say that sterling is set to slide.
usd/chf: the candles said that the dollar was going to rise against the franc and that is what happened to the tune of 167 pips from open to close. The dollar rose to 1.20 on Thursday before falling back to close at 1.1917. This gives a forecast rating to +1.40%.

Monday, November 10, 2008

forecast for week Nov 10 - 14

eur/usd: weekly candle 3-7 Nov. This candle pattern marks the second week of correction of a down trend and is a doji. It signifies uncertainty but its high is lower than the previous week and the correction up is less. This leads me to continue to be bearish on the euro and give last week's levels of resistance (1.3275) and support (1.25 then on to 1.23).

forecast: the candles are coy yet whisper sell the unit against the buck

usd/jpy: weekly candle 3-7 Nov. This candle pattern is on the top of a correction of a down trend and is called doji. It signifies uncertainty and we should hold our horses. I anticipate support at 95.50 and resistance at 102.50.

forecast: the candles advise you to make yourself comfortable on that fence.

gbp/usd: weekly candles 27-31 oct & 3-7 Nov. This two-candle pattern is on the current down move and is called engulfing. In this position it is a strong bearish signal. Initial target/support at the tweezers (identified last week) at 1.5280 with resistance at 1.61.

forecast: the candles say that sterling is set to slide.

usd/chf: weekly candles 27-31 oct & 3-7 Nov. This two-candle pattern is on the current up move and is called engulfing. In this position it is a strong bullish signal and if we get a daily close above initial resistance at 1.18, next target is 1.19. Initial support at 1.16 with strong support at 1.1470.

forecast: the candles say that the dollar will rock as the swiss franc rolls.

forecast rating system

The aim of this blog is to explore the effectiveness on candlestick analysis and I think I'm going to need a more objective forecast rating than my own judgement. This is what I'll do. In last weeks analysis I said the euro would weaken against the dollar. it didn't, it rose 27 pips that's 0.21% so I'll call that -0.21. USD/JPY will be -0.25, GBP/USD +2.59, USD/CHF was a wait-and-see so that's 0. Total +2.13

Saturday, November 8, 2008

How did the candles do last week?

usd/chf: the hanging man failed as a bearish signal with price rising 200 pips over the week. CHF opened lower and closed higher, engulfing the body of the hanging man. My support wasn't tested at all and resistance held until Friday. My forecast was wishy-washy to say the least. However, it must be said that the franc hasn't regained its former status as a safe haven currency.
forecast rating: 2.5/5

usd/jpy: piercing lines did not hold true to its bullish promise. Price was unable to break 100 and fell 150 pips over the week. Support at 95.70 went untested. It goes without saying that the dollar failed to 'reach for the stars'.
forecast rating: 1/5

eur/usd: the candles were more reliable than my forecast here. The spinning top is a sign of uncertainty and price had no real direction over the week and closed on Friday less than 30 pips higher than its open on Sunday night. Neither support nor resistance were tested.
forecast rating: 2.5/5

gbp/usd: the spinning top was neutral but price fell 400 pips over the week. My levels of support and resistance were untested but my forecast was sound.
forecast rating: 3/5

Friday, November 7, 2008

...and bump!

eur/gbp hit the giddy heights of 8185 this morning and then went into a serious decline, closing my trade around 11 am .81. Leaving me with a profit of 50 pips which, I suppose, is better than a slap on the head with a wet fish.

Thursday, November 6, 2008

...and upward

and then locked in a little profit by raising my stop to .81 before going to bed. night night.


...and raised my target to my original 8250 - the BoE cut has changed the fundamental balance of the pair so may be 8250 is not too optimistic after all. Anyhow with my stop at break even, I've nothing to lose ('cept my profit).

steady as she goes

...raised stop to break even at 8050...

ecb delivers but reality bites

ECB cut 50 bps as expected with hints of another cut next month. Order triggered but things have calmed down and my optimistic target of 8250 seems somewhat over optimistic. I've raised my stop to 7795 and lowered the target to 8150.

BoE in 150 bps slasher!

So I'm between announcements now and this is my play:

BUY EUR/GBP @ .8050, s/l @ .7950 and t/p @ .8250

a long shot, but maybe a goody.

Wednesday, November 5, 2008

central bank action in europe

Big day tomorrow with both the BoE and the ECB due to make interest rate announcements. Both banks are expected to cut by 50 bps. The ECB will probably not surprise anyone and I expect a 50bps cut. However, the BoE is not so cut and dried. A lot of commentators are calling a 75bps cut with some suggesting a full 1%. I'm planning on monitoring EUR/GBP and doing nothing if the BoE cuts 50 and looking for a quick in and out buy if it 75 bps+. I am going to check the situation an hour or so before the BoE move (12:00 GMT) and may modify my plan then. I'll keep this blog posted.

an historic day... but not on forex

Congratulations to the USA on their new President (elect) I'm not an American myself, but I couldn't help but be moved by Mr Obama's speech last night: poise and clarity - a true statesman. So what's the deal on Forex? I was thinking (fundamentally) that the markets would like an Obama win and as the Forex markets are currently tracking the Equities markets then this would mean that the Europeans would strengthen against the greenback and the yen would weaken (in opposition to my weekly candlestick analysis). Currently, there's doji on EUR, CHF and GBP and some dollar strength against the yen - but nothing really definite and nothing spectacular...

Monday, November 3, 2008

central bank down under

One other thing worth checking at 03:30 is the RBA’s (australian central bank) interest rate announcement. They are expected to cut by 50 bps from 6.00% to 5.50% and a cut of 25 bps could be a good buying opportunity for a quick in-and-out 50 pips. If they cut 75 bps to 5.25% (or even better 100bps to 5%), I’m planning on selling the Aussie with a target of 0.6650.

forecast for week Nov 3 - 7

weekly candle 27-31 Oct, usd/chf.

A long lower shadow and a small real body forms at the top of an up move, this is the hanging man, a weak bearish signal.

CHF has been trending up since March and this pattern signals that the bears may be taking the initiative. I'd be cautious here until we see a definite direction. Resistance at 1.1750 and support at 1.1380

My forecast: it's touch and go whether the franc will regain its safe-haven status.

weekly candles long black 20-24 Oct; long white 27-31 Oct, usd/jpy.

A long white closes more than half way up the previous longer black, this is piercing lines, a bullish reversal pattern.
This week price will first encounter support at 95.70 and if this breaks down, the next target is 92.00. However, the pattern is bullish and we see a break out of 100 giving us a target of 103.30.

My forecast: watch the dollar reach for the stars

weekly candle 27-31 Oct, eur/usd.

Long shadows, small body, this is a spinning top, a sign of uncertainty. The long upper shadow gives the pattern a bearish tone and the long term trend is bearish too. The lower shadow is testing support at 1.25 and if this level breaks down, my next target is 1.20. Resistance at 1.3275.

My forecast: euro will weaken against the buck

weekly candles, long black 20-24 Oct; short white 27-31 Oct , gbp/usd.
Short white body, long shadows of equal length, this is a spinning top with neither a bearish not a bullish tone. Lower shadow forms tweezers with previous week's candle: signalling strong support at 1.5280. We see resistance at 1.6670, just above the evening doji star formed two weeks ago.

My forecast: watch sterling stumble against the greenback


This is my first post on my first blog.

This blog is going to look at weekly candlesticks on the four main forex pairs (EUR, CHF, JPY and GBP) and discuss what can be learnt from them.

The blog will also comment on all things forex. It will link to sites, articles and writers of interest.

The blog may be of interest to forex traders and users of technical analysis.

The blog is open to comments, questions and suggestions.
blogarama - the blog directory Add to Technorati Favorites Blog Flux Directory Blog Directory  engine
Blog Directory