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:

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

...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...

...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

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

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)

...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

...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.