Colt on Candles

G20 boosts risk appetite - do ya feel hungry?

2009-04-04T21:41:00.004+01:00

EUR/USD Last week's key level (1.32) proved key indeed. Price failed to break support at 1.32 on Monday and retested the same support on Wednesday. Boosted by G20 optimism and the ECB's less than expected rate cut, the pair tested 1.35 on Thursday and closed the week at 1.3484.
Last week left us with a bullish piercing lines. However, the crucial level this week will be 1.35. If eur/usd can break through that then you may consider going long (target: 1.37). The pair will also meet strong resistance at the 1.3735 (see the tweezers formed by candles for March 15-2o and 22-27). Look for a retest of 1.38 from above before opening a new long with a target a tad below 1.40. If the pair cannot overcome resistance at 1.35, a clear breakdown of 1.3350 could signal a short (target: 1.32).
GBP/USD gave me no signal to sell last week, which was just as well as cable was lifted to a week high of 1.4845. We were left a very bullish engulfing. However, expect massive resistance at 1.50 and set any targets accordingly. Also beware of a post G20 hangover, sterling could be particularly sensitive.
USD/JPY our long call on the piercing lines signal paid off and after initially falling to Forex Focus' support level , U/J battled through resistance at 98.50-100 to close the week above the ton. I'm waiting for a pullback/rebound of 100 to buy with a target in the 105 region.
USD/CHF Last week's crucial levels held. Last week's pattern was bearish (piercing lines). With the range I mentioned last week still holding, wait for breakdown of 1.12 before shorting.

last week's calm before this week's storm?

2009-03-29T19:42:00.002+01:00

Nothing ventured...so nothing lost! Last week's dollar bear calls were not triggered so it was all quiet on the candle front.
Last week's dollar strength has given us a much different picture as we gaze into a week enlivened by the G20 summit, the ECB interest rate announcement and Friday's NFP.
EUR/USD: the euro did no more than trade within the previous week's range. Last week's key level around 1.32 still stands and price development at this level will give us a better idea on direction.
GBP/USD: Cable's gone bearish and I'll be looking for a signal to sell between 1.4350 and 1.44.
USD/JPY: last week gave us a bullish piercing lines. However, a dollar rise will be strongly resisted between 98.50 and 100.
USD/CHF: the swissy is trading in a range atm. Key levels are 1.15 and 1.1260

E/G to make a break?

2009-03-26T11:00:00.002Z

EUR/GBP is on the up once again. Yesterday's day chart completed a bullish signal (halfway between harami and engulfing). Early European trading saw the pair find support just above Tuesday's gap. Once price has broken .9380, I'm looking for a long opportunity above .94.

last week's round-up, this week's calls.

2009-03-22T21:46:00.004Z

another spate of decent calls last week methinks.
EUR/USD: we were bullish on the euro and, boy, didn't that baby go. We were left with a long white, which signals a continuation of the bullish tone. However, I'm ready to wait and see what happens in the next 24 hours or so. Ready to consider a long at this juncture only if price falls to 1.32
GBP/USD: there certainly was a pause in cable's downtrend last week and the ensuing bullish engulfing is a buy signal. However, fools rush in and I won't be looking to buy until price falls to around 1.42.
USD/JPY: we called a bear bias for last week and that's how things panned out. I'm looking to trade a 94-99 range this week.
USD/CHF: the previous week's bullish engulfing was engulfed in turn by the bears last week. You could try looking for shorting opportunities if price rises to 1.15 but beware the SNB.
EUR/GBP: This pair is paying out nicely at the moment. I'm still ready to buy but I am waiting for a bullish daily candle to close above 0.95 before jumping in again

this week's calls

2009-03-15T21:46:00.003Z

...reasonably pleased how last week's calls went with decent results on the swissy, cable and eur/gbp.
Now to this week's forecast:
EUR/USD: last week's long white brings a bullish tone to the world's favourite pair.. I won't be going long until I see a clear break of 1.30, mind.
GBP/USD: last week's spinning top is signalling a potential pause in the cable's current down trend. I'll be range trading initially within 1.37 and 1.43.
USD/JPY: another spinning top, but the lower highs and lows outweigh the longer lower shadow and I read a slightly stronger bearish bias. However, I'm still trading the range on this pair and looking for excuses to short above 99.25 with the reversal around 96.
USD/CHF: the SNB intervention left us with a bullish engulfing. You might try going long if price falls to 1.17, but I'd check out the action on EUR/CHF here, because that's the pair the gnomes in Zurich are worried about.

eur/gbp's doji may well be signalling a pause.

2009-03-12T20:24:00.003Z

Thursday looks like it's closing as a doji, perhaps signaling a correction for Friday. I'm raising my stop loss to 0.9200, meaning I'll be left with 150 pips in the bag if I get stopped out.

euro continues to strengthen against sterling

2009-03-11T13:55:00.004Z

eur/gbp did the business (see patterns line up on the chunnel) on Monday morning and broke out of 0.9000. I got in at 0.9050 just after 10am . Price is now at .9260, I've got around 100 pips profit locked in and if I make 0.9500 before Thursday is out I'll be a happy man.
Nothing else exciting me atm.

candle calls

2009-03-08T18:07:00.004Z

Last week's doji on the euro leaves me still bearish on this pair and I'm looking to short a pullback from the 1.27 region. However, I'm also inclined to see how Monday pans out to give us a more clear direction before jumping in.
Cable's downside move last week leaves me more bearish and I'm shorting at 1.43, failing that I'll be shorting the week's first peak.
USD/CHF's spinning top was planted firmly in the 1.15-1.18 range and I'll be watching when price nears those levels once more to judge possible direction.
USD/JPY left us with a bullish spinning top last week. However, I'm going to hang loose, accept the indecision inherent in spinning top and see what the first hours of trading bring.

doji on eur; spinning tops for the franc and the yen; downside action for cable.

2009-03-07T22:06:00.009Z

Last week's calls:
The week left eur/usd sporting a doji, a classic sign of uncertainty. Price never rose high enough to hit my trigger at 1.2850, though you could have tried shorting the gap at 1.2696. Wednesday's 01:00 long black saw the next 11 hours or so trade inside and going long on the upside breakout would have been a good move.
My swissy forecast fared well, my first short at 1.18 broke even, while the second took me all the way down to 1.15 as predicted.
I didn't catch usd/jpy on the way up from 97. But as I said in last week's call, I expected the pair to encounter strong resistance at 100 and I sold the buck on the breakdown of 99 on Thursday morning to close the position at 97.
Left cable alone last week when it failed to hit my target to short.

Patterns line up on the chunnel:
On an aside (charting rather than candles), I am watching for an upside breakout on eur/gbp at around 0.9000. The level has been offering strong resistance for weeks now (this is most clear on the day chart), while the pressure has been ratcheting up in the shape of an ascending triangle. Over on the pair's hourly chart, we've had a descending wedge forming since January and price is closing in and could test the wedges resistance soon. A true breakout of of both resistance lines will find me buying the euro against sterling with a target in the region of 500 pips. There's some background on how the Lloyds TSB bailout could make the upside breakout a more likely event here.
Charts to follow if requested.

last week's call & this week's too

2009-03-01T18:03:00.007Z

... last week's forecast wasn't too far short of the mark imo. EUR found resistance at 1.30 and went down to test the target at 1.26. Downside action for cable kicked in around 1.46 but just fell short of the target at 1.41. I was long for usd/jpy and although price failed to fall to my trigger at 92, going long at 95 saw a tidy profit just shy of 98. I was a wee bit out on chf, however no downside break of 1.15 meant no short was opened.

...this week, eur/usd has turned slightly more bearish and I'll be looking for downside action within a range of 1.2850 and 1.25. the spinning top on cable will prompt me to look for opportunities to sell sterling against the dollar around 1.4370. usd/jpy was proudly bullish last week. this could well continue and I may try buying around 97 with a target just shy of 100. However, if the pair hit 100, I will be looking to short. usd/chf is range-bound and I'll be perking up when price action nears the boundaries of the range, that's 1.15 and 1.18.

trade closes even-stevens

2009-02-24T12:33:00.002Z

...trade closed at break-even and eur carried on rising past 1.2770 and is testing 1.28 once more. Once again, I'm looking for signs of a continuing downtrend and will consider opening a position if the pair falls below and then retests 1.2660.

plan for cable

2009-02-23T21:06:00.003Z

...gbp/usd is on its way south after testing resistance around 1.4650. I'm waiting for a breakdown then retest of the gap at around 1.44 before selling below the breakdown low:

1.27 tested & I wimp out.

2009-02-23T20:09:00.003Z

...eur testing support @ 1.27; this level could prove a challenge. I'm bringing my stop down to break-even (1.2770):

position on eur

2009-02-23T15:36:00.007Z

...placed this order just after 14:00:
Sell@1.2770; s/l@1.2834; t/p@1.26:

position opened at 14:30.

potential short on eur?

2009-02-23T13:23:00.005Z

...eur gapped down on the open leaving a nice band between 1.28 and 1.2835 that is a likely zone of support and resistance. eur has just re-entered that zone from below. I'm looking for resistance to hold at 1.2835 and will then place an order to sell at 1.2780...

candle forecast for February 22-27

2009-02-22T20:14:00.005Z

Looking at this week's forecast, I'd say the dragonfly on the eur points to upside action. However, I won't be entertaining a long position before I see a daily close above 1.30. If 1.30 offers strong resistance, look to go short with a target of 1.26.
Last week's spinning top suggests that sterling is also range-bound. As the trend is still down, I'm looking for downside action around 1.46 with a target at 1.41.
Last week's upside jpy action paid me well. However Friday's US banking jitters have left me looking for signs to go long around 92 with my sights set at 94.50.
Last week's chf candle was distinctly bearish. I'm waiting for a clean break of 1.15 before jumping in.

this week's punt, courtesy of the candles

2009-02-15T20:06:00.005Z

...not a brilliant week and I watched as the two orders that triggered (jpy and gbp) both stopped out, costing me 212 pips.

Looking forward to this week:
the candles find eur in a range- I'm looking to short at 1.2950
they are bullish for usd/jpy and I plan to go long at around 90.50
the signs are bearish for gbp and I'd like to short at around 1.48 if possible.
Full details with charts to follow...

orders placed

2009-02-08T23:50:00.001Z

eur selling @ 1.3350; s/l @ 1.3530; t/p @ 1.28
gbp buying @ 1.4605; s/l @ 1.4470; t/p @ 1.5350
jpy buying @ 91.07; s/l @ 90.20; t/p @ 94.50

Calls for eur, gbp and jpy

2009-02-08T20:09:00.004Z

A quick call to state this week's bias before the markets open in an hour or so's time.
We are looking for to short eur/usd and to buy gbp/usd and usd/jpy. Tomorrow's post will have full details of the candle analysis and orders.

eur trade stops out

2009-02-03T17:30:00.003Z

eur/usd hit 1.3034 a couple of hours ago and our position closed at a loss of 229 pips. The pair had been rising steadily since the start of today's US session and broke 1.30 just after the release of a better than expected US pending home sales.
I'm waiting for a breakdown of 1.30 followed by pullback to short again.

candles say eur/usd to continue its slide

2009-02-02T20:33:00.006Z

Only one call this week, we're bearish on eur/usd (order levels here) :

We taking the long upper shadow on last week's black as a bearish sign. Of course, the current run of weekly blacks and the fact that last week's candle could qualify as a bullish inverted hammer give food for thought. However, the fact that the body of the candle is totally below 1.30 convinces me to run with the bears. Only time will tell.

I'm out on the other majors. True, cable was well up last week and completed something between a bullish harami and a bullish piercing line. Only the fact that cable closed below the psyche level of 1.45 kept me out. I would consider going long after a breakout/retest of 1.45.
usd/jpy traded inside the previous week's candle. The pseudo-harami that we are left with might suggest upside action but the close below the key level of 90.00, means it's no go for me.
The upmove of the past month or so from usd/chf seems to be petering out. However, 1.15 needs to be broken down before I'm tempted.

candles slide for the second week in a row

2009-02-02T20:14:00.005Z

Looking back onto last week's calls, you may remember that the candles were bullish on usd/jpy and bearish on gbp/usd.
The yen call started well but as risk aversion set in during the second half of the week the yen strengthened and ate into a significant part of the bull move. With last week's open at 88.78 and the close at 89.82, we were left with a profit of 104 pips. That's a forecast rating of +1.16%

Cable had an upbeat reprieve after the previous week's slump. gbp/usd opened and at 1.3805 and climbed pretty steadily to 1.4491, leaving the candles 686 pips to the bad. A forecast rating of -4.73%.
The total for the week came in at -3.57%, bringing the running total down to +4.19%. Another week like that and we'd be close to zero once more.

However, as of this week I am changing the nature of the call and will be giving stop losses and take profits. If the call doesn't hit the limits before the week is out, the week's close will also close the trade. This means I'll be able to track the candle performance in pips. However, the downside is that my orders may muddy the waters a bit. We shall see.

candle calls February 2nd-6th

2009-02-01T21:46:00.002Z

Here's my quick call for the coming week.
I'm bearish on eur/usd with an initial stop loss at 1.3005 and take profit at 1.2405.
Full details and the lowdown on the other majors to follow tomorrow.

candle calls January 26-30

2009-01-27T22:12:00.009Z

Now on to this week's calls. I made two on Sunday night when I said I was selling pound against the dollar and buying the dollar against yen.

Let's take a closer look:
gbp/usd: last week's long black smashed through long-standing support. We are bearish on cable this week.
support: 1.3500, resistance: 1.4370

usd/jpy: last week's long black formed an bearish engulfing with the previous week's short white. however, those long lower shadows and the tweezers which are formed by last week's candle and the similar long black of dec 15-19 suggest a bullish move for the pair.
support: 87.00 resistance: 90.00, then 92.40 and then 94.00.

candles burn my fingers

2009-01-27T21:27:00.004Z

If you cast you mind back to last week (jan 19-23), you'll remember that we were selling usd/chf. this because resistance had held at around 1.1283 giving us a tweezers pattern of sorts which coupled with the spinning top of jan 12-16 seemed enough to get bearish (pretty tenuous in hindsight tbh). Anyhow, tenuous or not, the greenback had a good week against the greenback. It opened at 1.1140 and closed at 1.1558 , moving 418 pips against us. That's a forecast rating of -3.62%

We were bullish on usd/jpy, mainly because of the weekly close above 90 and jan 12-16's bullish spinning top with a long lower shadow. However, this too was not to be. The pair opened at 90.99 and closed at 88.82, moving 217 pips aginst us. That's a forecast rating of -2.44%

The week's total rating came in at -6.06%, and reduces the running total to

14.98 - 6.06 = +8.92%

What a week! (apologies)

2009-01-25T22:08:00.003Z

It's been one hell of a week and I've been painfully aware that I have been lacking in the blog department.
I'll post a full report on last week's (crappy!) calls.
This week the candles are bearish on gbp/usd and bullish on usd/jpy.

Until tomorrow, cheerio.

Quick call as the market opens...

2009-01-18T23:27:00.005Z

The week's a couple of hours underway so this is a quick post to make my calls:
usd/chf sell
usd/jpy buy

the full details will follow tomorrow as per usual.

goodnight.

the candles continue to edge ahead

2009-01-17T16:59:00.006Z

...another positive week for our calls. the dollar gained against the euro as concerns for the integrity of the 16-nation unit grew as Greece's credit rating was downgraded and Portugal, Ireland and (most worryingly) Spain said to be on the watch list. The ECB cut rates by the anticipated 50 bps to 2.00%. this precipitated further euro weakness perhaps because it's seen as too little too late or because Jean-Claude Trichet cued up another round of cuts for his March rendezvous. eur/usd recovered somewhat on Friday when the Bank of America was thrown another US government lifeline, bringing some much needed optimism to the markets.
With eur/usd opening the week at 1.3455 and closing on Friday at 1.3288, our short call brought in 167 pips. This gives us a forecast rating of +1.26%

Our buy call for usd/chf saw modest success with the pair opening at 1.1135 and closing at 1.1170. This brought a princely 35 pips into the pot. 35 pip is 0.31% of the closing price and thus gives us a forecast rating of +0.31%

All in all, the week's forecast total is +1.57%

Bringing our running total to +14.98%

Next week will be a difficult one to call with the Martin Luther King Day holiday and Barack Obama's inauguration bringing uncertainty to the markets. I'll be posting the candle signals tomorrow - until then, have a good weekend.

e-book from Nick B

2009-01-15T21:30:00.002Z

Here's something that's well worth a look, Nick B's ebook on master candles. At 17 pages, the book is clear, concise and very useful for anyone wanting to learn more about candlestick analysis.

calls for eur and chf, week January 12-16

2009-01-12T16:21:00.015Z

...let's have a closer look at the signals I mentioned yesterday:

eur/usd (jan 5-9): this long black continues last week's euro bear signal and we'll continue to sell the 16-nation (hello slovakia!) unit.

forecast: the candles say that eur is a southbound train.

support: 1.3200
resistance: 1.3750

usd/jpy (dec 29-jan 2; jan 5-9): this two-candle pattern is a bearish piercing line and the long upper shadow on the black gives it extra kick. however, last week's close above 90.00 made us wary that the BoJ would be setting its intervention rumour-mill going once again. which means we're sitting on our hands.

forecast: we're afraid of the big bad bank!

support: 87.20
resistance: 92.50

usd/chf (dec 22-26; dec 29-jan 2; jan 5-9) last week's long white gives weight to the previous week's hammer and closes above the long black of christmas week. it's a bull signal, though that longish upper shadow makes us a wee bit nervous.

forecast: greenback to strengthen against the franc

support: 1.1000
resistance: 1.1400

gbp/usd (17 nov-9 jan): this pic shows the range that cable has been trading inside for the last two months. I'm setting the boundaries of the range as the open of the long black (10-14 nov) and the close of the spinning top two weeks ago (29 dec-2 jan), giving us a top of 1.5770 and a bottom of 1.4499. It's difficult to see us getting a weekly signal until there's a clear day breakout of this range. However, the range provides good opportunities for intra-day trading once price tests either support or resistance.

forecast: We're holding fire.
support: 1.4499
resistance: 1.5770

candle calls for the week

2009-01-11T22:24:00.004Z

...just a quick post to make this week's calls as the markets open. the candles are short on eur/usd and long on usd/chf, so we're dollar bulls again. we're sitting on the fence with cable and usd/jpy. full details to follow tomorrow.

yen and euro calls reviewed

2009-01-09T22:29:00.003Z

...the candles were dollar bulls on both eur/usd and usd/jpy this past week. the close of the week sees one good call (sell eur/usd) and one bad (buy usd/jpy). however, the balance sees our weekly forecast rating in positive territory.

the recently rampant euro struggled against most currencies this week, most notably falling the most against sterling since the euro's inception 10 years ago. the dollar was no exception: the euro opened the week at 1.3905 and promptly started falling to hit 1.3311, only to rise again against a backgound of weak US data, closely followed by the FOMC meeting minutes which showed the Fed in a distinctly downbeat mood. the rise continued until US NFP came in less worse than many on the floor feared. the dollar strengthened accordingly to close the week 476 pips down on the week at 1.3429. this gives a forecast rating of +3.54%
usd/jpy also kicked the week off in the right direction, but the move was scuppered on Tuesday too. Friday's NFP couldn't do enough and the pair fell 184 pips over the week to close at 90.22, leaving us with a forecast rating of -2.03%

the rating total for the week is, therfore (3.54 - 2.03) +1.51%, which makes the running total (11.90 + 1.51) +13.41%.

following the candles into 2009

2009-01-03T22:25:00.009Z

...the new year opens to the first full trading week of the year and the candles shine out against the gloom predicted by pundits in all camps. the events of the coming year are way beyond the scope of this blog, however, the candles do have something to say about the coming week. i spy dollar bulls on eur and jpy, while the candles flag caution on chf and gbp.

let's take a closer look:
usd/jpy (dec 15-19; dec 22-26 & dec 29-jan 2) that long lower shadow on the black adds strength to the harami reversal signal from the black and the following white. last week's white adds further confirmation.

forecast: these three candles point to further yen weakness. however, I'll be waiting for a clean breakout of 92.60 before making a move.
support: 90.85
resistance: 94.40

eur/usd (dec 22-26 & dec 29-jan 2) this bearish engulfing could well spell a euro reversal around the key psychological level of 1.40 and the black candle's long upper shadow brings more force to the argument.

forecast: the candles are telling me to sell the euro.
resistance: 1.4080
support: 1.3570

usd/chf (dec 15-19; dec 22-26 & dec 29-jan 2) the two long lower shadows of the first and third candles form tweezers (or as near as dammit!) testing support at around 1.0500. last week's dollar up-move against the franc wasn't strong enough to anticipate more dollar strength this week. I shall sit tight and wait for a breakout of the range of the dec 15-19 candle.

forecast: wait-and-see: the swissy is taking a breather.
support: 1.0500
resistance: 1.1200

gbp/usd (dec 29-jan 2) although sterling seems set for more weakness in the coming weeks this spinning top at the key psych level 0f 1.45 is giving me food for thought.

forecast: spinning top signals uncertainty so there's no call on cable this week.
support: after 1.45, look for 1.40 and then down to 1.3330
resistance: 1.4930

Happy New Year!

2008-12-31T11:27:00.007Z

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:

eur/usd: 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!

shadowing christmas

2008-12-22T12:58:00.013Z

...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

looking forward to christmas week...

2008-12-21T21:46:00.002Z

...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.

candles deliver for the last full week of 2008

2008-12-20T19:06:00.005Z

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.

fed fireworks end the year with a bang

2008-12-18T06:04:00.001Z

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.

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

2008-12-15T10:48:00.011Z

...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)

...as 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.
support: 1.3290
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.

support: 1.1605
resistance: 1.1920

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!
support: 89.0
resistance: 93.0

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

thanks Mike G + this week's calls

2008-12-14T22:13:00.004Z

...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

2008-12-14T09:04:00.004Z

...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%

can i get there by candlelight? (calls on CHF, JPY & GBP

2008-12-07T21:11:00.011Z

...as 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

excuses, excuses

2008-12-06T20:37:00.007Z

...it'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.

How did the candles do last week?

2008-11-30T23:30:00.003Z

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.

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

2008-11-24T10:30:00.009Z

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.

How did they do?

2008-11-22T20:52:00.005Z

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.

forecast for week Nov 17 - 21

2008-11-17T09:17:00.008Z

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

How did the candles do last week?

2008-11-15T12:49:00.006Z

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%.

forecast for week Nov 10 - 14

2008-11-10T10:35:00.006Z

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

2008-11-10T10:07:00.003Z

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

How did the candles do last week?

2008-11-08T16:03:00.003Z

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

...and bump!

2008-11-07T11:08:00.003Z

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.

...and upward

2008-11-06T22:07:00.000Z

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

...onward...

2008-11-06T20:44:00.004Z

...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

2008-11-06T20:14:00.001Z

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

ecb delivers but reality bites

2008-11-06T15:22:00.003Z

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!

2008-11-06T12:14:00.002Z

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.

central bank action in europe

2008-11-05T18:25:00.003Z

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

2008-11-05T18:08:00.002Z

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...

central bank down under

2008-11-03T21:20:00.003Z

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

2008-11-03T10:56:00.009Z

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

introduction

2008-11-03T10:12:00.000Z

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.