Wednesday, December 31, 2008

Happy New Year!

along with the holiday distractions, I'm also in the middle of moving my family from Russia to the UK and I haven't had the opportunity to get down and update this blog. my apologies. however, I would like to thank every reader of colt on candles and wish you the very best for 2009.

let's just wrap up last week's calls: two good, two bad with the total rating a smidgeon into negative territory. here's how it breaks down:

the candles were bearish on the euro. however, it opened at 1.3914 and closed at 1.4057, that's 143 pips up on the week. This gives us a forecast rating of -1.02%

usd/chf: I thought the candles were dollar bulls on the swissy too. however, you may recall that I was more luke-warm about this signal than the euro one. in retrospect, I think that this was due to the ratio between the candle body length to the shadow length. in future I will only accept a long shadow signal if the shadow is longer than the body. anyhow, the reading/signal was duff and usd/chf fell some 360 pips, leaving us with a forecast rating of -3.37%

gbp/usd: sterling fell like the candles said it would. After opening the week at 1.4942, it closed at 1.4653, a drop of 289 pips. this leaves us with a rating of +1.97%

usd/jpy: as the candles suggested, the dollar opened the week at 89.14 and rose to 90.67, a 153-pip rise and a rating of +1.69%

all in all that gives us a forecast rating of -0.73 for the week, and makes our running total (12.63 - 0.73=) +11.90

since this week is almost over, I won't post any calls. I will be back, bright and breezy, for the first full week of 2009.

Happy New Year!

Monday, December 22, 2008

shadowing christmas

...the candles [or at least their shadows] have something to say about all four majors this week. however, anyone who is trading this week should take extra care to tighten their stops and be
rigorous with their risk management. this is what the candles are telling me for this week:

eur/usd (dec 15-19): the euro's rise and fall last week has been well-chronicled. that long upper shadow points to bearish pressure and its length suggests to me that the euro will more probably fall this week than rise.

forecast: as long as resistance holds at 1.4180, usd should prevail over eur.

support: 1.3500
resistance: 1.4180

usd/chf (dec 15-19): as is so oten the case the swissy is a mirror-image of eur. however, note that this move had more vigour.

forecast: that long lower shadow makes dollar strength against chf more likely than dollar weakness.

support: 1.0696
resistance: 1.1420

...if I were to make a choice between these two signals, I'd go for the eur call.

gbp/usd (dec 15-19): this week's doji shows that the ugly contest I wrote of last week ended with the dollar coming out less repulsive.

forecast: that long upper shadow signals more winter darkness for poor old sterling

support: 1.4470
resistance: 1.5250

usd/jpy (dec 15-19): although this lower shadow is the weakest of the four, the odds are that an upmove is on the cards.

forecast: if it's touch and go and the yen continues to strengthen, the BoJ might well help us out. we see some improvement for usd/jpy

support: 88.30
resistance: 92.50

Sunday, December 21, 2008

looking forward to christmas week...

...the candles are bullish on usd/jpy and usd/chf and bearish on eur/usd and gbp/usd - in fact dollar bulls across the board in this run up to christmas. however, the market will be thin and could prove skittish in the extreme, so be careful out there. I'll post tomorrow with full detais of the candle calls.

Saturday, December 20, 2008

candles deliver for the last full week of 2008

two calls last week, bullish on eur/usd and bearish on usd/chf.
eur hit the ground running with the fed's move towards zero fuelling the ascent. the euro retraced 50% of its fall from 1.60 and then tested the 62% retracement level (around 1.47) before falling back on Thursday after the ecb cut its deposit rate in an attempt to get the money moving again. The move was hardly a surprise and will not come into effect until January 21, but the euro started to fall as the story broke and continued south until the end of the week. Nevertheless, the euro's early surge saw a weekly gain of 560 pips as it closed at 1.3921. That's a forecast rating of +4.02%.
we got a bearish mirror-image from usd/chf with added swiss fizz as the franc tested the 74.4% retracement level from the recent upmove to close the week at 1.1032, giving us a 733-pip confirmation of the candle's signal. This scores a forecast rating of +6.64%.
The week's forecast total comes to +10.66%, which gives us a running total of +12.63%.

Next week's trading will be light which means it could be flat or it could be really rocky. tomorrow, we'll be looking at what the candles foresee for the run up to christmas.

Thursday, December 18, 2008

fed fireworks end the year with a bang

so the fed put up their hands and admitted their inability to fix rates, opting instead for a range of between 0.00% and 0.25%. they said that the economy was in a terrible state and would be for 'some time' to come. they promised seemingly unlimited injections of cash to fix the problem. [gulp] we can only wait to see what 2009 brings...
the best round up of the fed's actions on Tuesday was in this Financial Times article: Fed slashes rates to near zero . I'd recommend watching the John Authers video report in the article. It's a clear concise (albeit sobering) rundown with a rather endearing touch at the end.

Monday, December 15, 2008

candle calls for this week (calls on eur & chf)

...this week is the last full trading week of 2008 and should prove to be full of interest. the fed are ensconced behind closed doors as I write and will announce their interest rate tomorrow, 19:15 gmt. the consensus is for a further 50bps cut to 0.50%.
the other big story this week will no doubt be the US Treasury's move to save the US auto industry from collapse. it's all very vague at the moment and this week should see the answers to the main questions:
how much?
from where? (george w said that using the tarp funds was a 'possibility')
and for how long? (most likely until obama takes the helm) I was saying yesterday we've two calls:
eur/usd (dec 1-5 & dec 8-12): last week's long white confirmed the doji of the week before and could possibly mark the breakout of the narrowing range that eur/usd has been trading in for the last 6 0r so weeks.

forecast: the euro looks set to continue its recovery.
resistance: 1.3645

usd/chf (dec 8-12): the franc woke up and last week's impressive long black leads us to expect more downside action this week.

forecast: the candles remind us that december is often difficult for the dollar.


usd/jpy (dec 8-12) last week's long spinning top charts downside pressure as traders ran for cover. However, the dollar rally at the end of the week marked speculation that the BoJ would intervene to weaken the yen. Japan's finance minister left me no wiser on friday and that long lower shadow on the candle bodes caution.

forecast: the candles caution against pitting your account against the BoJ!

gbp/usd (dec 1-5 & dec 8-12): sterling tried to strengthen but couldn't break resistance at 1.50 and spent the week inside the previous week's range. Although the bias seems to be on the downside, the candles are holding their horses.

forecast: the candles are watching this ugly-contest with interest
support: 1.4660
resistance: 1.5150

Sunday, December 14, 2008

thanks Mike G + this week's calls

...your comment is much appreciated Mike. I am far from feeling discouraged and I share your belief in the value of candle analysis. The problem with the fundamentals is that there are so mony factors in play with intermarket influences in addition to the more obvious data releases. In the new year, I hope this blog will develop to make more precise calls (with orders) primarily based on the candles but bringing other technical features and the fundamentals into play.

this week we're looking at two calls, one bullish for eur/usd and the other bearish on usd/chf. full details to follow tomorrow.

the candles splutter as the franc freefalls

...not a great week for the candles, however the lion's share of the blame must be placed on my broad shoulders.
I mentioned last week that there was a lot of 'me' in the usd/chf forecast and the market rapped my knuckles as the dollar lost ground in the safe-haven stakes to the tune of 424 pips over the week. that's a forecast rating of -3.6%
gbp/usd fared a little better (if not much) as the dollar weakened acoss the board. sterling saw a 205 pip gain against the greenback (forecast rating: -1.37%). however, sterling's failure to break resistance at 1.50 in a week of particular dollar weakness must point to a weaker pound in the coming weeks.
usd/jpy moved in our direction with the dollar hitting 13-yaer lows against the yen on Friday. I expressed concern over possible Bank of Japan intervention which were not calmed when BoJ governor Masaaki Shirakawa said on Wednesday that he was watching the forex market carefully. By Friday the bank was playing down such speculation when Japanese finance minister, Shoichi Nakagawa said that the country wasn't considering intervention. usd/jpy fell 176 pips, that's +1.93%

This leaves our running total further diminished (but still in positive territory!) at +1.97%

Sunday, December 7, 2008

can i get there by candlelight? (calls on CHF, JPY & GBP a retired policeman said to me this week these are indeed interesting times and maybe the candles can add a little clarity. however, the candles are challenging me at the moment, they are making me question how much I am queering their pitch :- just how much my perceptions are affecting what I was hoping to be a dispasionate analysis. of course, any pretensions to objectivity must been seen as naive, even hard scientists like physicists accept that and it follows then that something like candlestick analysis must be as subjective as they come. with this in mind, I am ready to grasp the nettle.

let's start with the least controversial:
eur/usd (dec 1-5) a pretty eventful week in the eurozone as jean-claude trichet broke with tradition by cutting interest rates by more than the expected amount. however, eur/usd was unmoved and closed the week to form a small simple doji which offered no confirmation for last week's hanging man.

forecast: i'm still waiting (respect to Diana Ross) as this pair stays resolutely in an ever-tightening range. when it breaks it could well be a big one!
support: 1.2390, resistance: 1.3090

usd/jpy (nov24-28 & dec 1-5) the previous week's spinning top was confirmed bearish by last week's long black. in normal circumstances this would be a 'go for it'. however, just pause for thought and consider the length of the lower shadow, there was a great deal of support for this pair below 93. more worringly, the pair is entering the territory where the bank of japan could well start weakening the yen - so procede with caution.

forecast: i'm with the bears here, but if the BoJ steps in all bets are off (as is the negative forecast rating!).
support: 90.90, resistance: 97

usd/chf (nov 24-28 & dec 1-5) my favourite this week. the previous week's black hanging man was followed by the same fruit of a different colour. what to do? i'm going to blend the candles (following Greg Morris, Candlestick Charting Explained) which will give us the open of the black and the close of the white. in otherwords a dragonfly (a 'T' with a long tail) and confirmation of the uptrend. i'm also heartened by the fact that the white body engulfs the black another bullish pointer. there is a lot of 'me' in this forecast and i'd welcome any comments/criticism.

forecast: i'm still a dollar bull when it comes to the franc.
support: 1.21, resistance: 1.2470

gbp/usd (nov 24-28 & dec 1-5) weird one this. the previous week's bullish confirmation went all bearish on me and wiped out almost 50% of the candles +ve running total. what we're left with is what i was taught was called penetrating lines, a bearish signal. however a quick scan of the internet revealed no such pattern. still, i'm ready to rank my memory over the internet and be bearish on cable.

forecast: the candles are telling me sterling is going down. however, they may be telling you something else!
support: after 1.45, 1.4130 , resistance: 1.50

Saturday, December 6, 2008

excuses, excuses's been quite a week and I just didn't get a chance to add to the blog. I suppose that the web is littered with blog debris, projects that started full of hope only to crash and burn after a few posts. A few more dormant episodes like this week's could add CoC to that sorry list and only I can ensure it doesn't happen...

as I wrote last week the candles were only shining on one of the majors, gbp/usd:

gbp/usd (candles for 17-21 & 24-28 Nov) the weekly candle that closed on the 21st was an inverted hammer which is a weak bullish signal at the bottom of a move. The following week provided confirmation in the shape of a long white. the candles were saying sterling would rally but as we now know, they were wrong. cable fell 623 pips from Dec 1st-5th. That's a pretty significant -4.23%. Coo! this it leaves the Colt on Candles forecast rating at a somewhat diminished running total of +5.01%.

will the candles keep their heads above water? only next week can supply the answers. tomorrow we'll see what the candles foretell for the coming five days and a quick scan of the charts now shows that we have clear signals on two pairs: cable and dollar/yen. tomorrow's post will deliver the full lowdown.
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