GBP-USD Post Analysis (29 May 2009)

Once again the candlestick counting method seems to work perfectly according to plan. It was 23 days ago (Read...), i have discussed about the possibility that the GBP-USD is going to form another white candlestick (monthly time frame) in the entire month of May. And now is the 29 May 2009 and it happens perfectly. This may seems to good to be true but yes it is and you can see it yourself on your trading chart. The white candlestick formed perfectly like a full eclipse without much wastage (see chart below).

The most perfect part of it is that on the 19 May 2009 (Read...) which is 10 days ago we are expecting the market to break resistance level 1.5385 to move towards 1.5729 (344 pips away) and yes it does. In fact the market is now currently at 1.5963 which is 200 pips more than the expected movement.

The expectation is 100% according to analysis of candlestick counting.

Forex Trade Result (29 May 2009)

Today is the last day of trading for the month of May and next week we are entering month of june where bearish sentiment is very much likely to happen. Therefore today the overall expectation for GBP-USD, EUR-USD, USD-CAD will still be bouncing ups and downs within the support resistance level. At this point usually there are three time frames mainly the 4 hourly, 1 hourl, and 30 minutes where indicators like slow stochastic will have strong impact on the market expected directions.

Scalping on the 30 minutes time frame is very difficult when you are at the support resistance level as the market could just slide away further based expected based on higher time frame indicator signals. In order to be safe, follow the highest time frame signals like 4 hourly in order to avoid the market overshot impact.

Forex Trade Result (28 May 2009)

Trading at support and resistance level is as difficult as ever because the expectation of the market moving towards overbought oversold position is always around to haunt your psychological stability. By following the indicators signals such slow stochastic, macd, and the bollinger bands in short-term trades all you need is none other than a little bit of luck on your side to earn the green pips.

Anyway below is the trade result tested on support resistance level.

Just a short recap from all the previous analysis as long as the month of May not yet ended the bullish sentiments for GBP-USD, EUR-USD, AUD-USD, GBP-JPY is still steaming high. So 4 hourly time frame support is believe to be strong.

GBP-USD Trade Results (26 May 2009)

Trade results for Pound-Dollar pair as of today and yesterday trade observation. Taking some chances from the minor correction. It is currently moving at the support resistance level on hourly time frame. I expected the market to make correction further to 1.5743 but it did not happen today. So this is what we got for today's scalping trade

GBP-USD Technical Analysis (19 May 2009) - READ | GBP-USD Technical Analysis (6 May 2009) - READ

How double top and double bottom exist?

One of the most popular chart patterns that you probably encounter in your daily trading is the double top double bottom formation. You can find this pattern almost in all time frames view ranging from 5 minutes to monthly. Before we go through deeper analysis on this, let's take a look what exactly are they?

What is double top chart formation?

Double top formation is simply a of chart pattern which resemble the letter M shape see picture below.

How it is formed is due to the market power trying to test the previous resistance level if it can breaks it. As the market fail to break the resistance in the second movement resulting in complete reversal of the market to create the M shape patterns. Even though you may not find this patterns all the time, but it is a worthwhile knowledge where you can keep in mind for future reference.

What is double bottom chart formation?

Double bottom formation is a chart pattern that resemble the letter W shape see picture below.

Even though their opposite shape, the caused of formation of the double bottom is exactly the same as double top. Where the market fail to break second resistance and then make a complete reversal.

My Fundamental Perspective - forex gambling

Even though i believe in the influence of fundamental factors on the market movement but i am not a keen fundamentalist practitioner when it comes to forex trading. In my opinion using the fundamental is like a gambling game. I have come to this conclusion after some of my observational experiences failed to discover consistent patterns that i can rely for over 3 years now. Perhaps the experience fundamental traders could explain more about this but i have a point to tell you why i believe it a gamble

Let's us evaluate one intriguing fundamental situations that we face everyday.

Consider a situation where you have access to the major central bank staff who is responsible for the economic data release everyday. In which the case you are always been informed ahead of others about the results of economic data that will come out on daily basis. Where as the major crowds is behind you. Since you hold the knowledge of the results, you have the ultimate confidence to open trade position based on the economic data expectation. During the release event itself the uninformed crowds are becoming anxious where some will open their trade position according to the data and some others on the opposite. In an unexpected situation suddenly there are more major crowds opening their bet against you. So you are obviously losing because the crowds are not on your side where the most money party is the winner. So think about it again even having the knowledge of the data release may not help you much in this kind of situation.

My best observation of such case is during Non-Farm payroll data release where the market moves very fast in extra-ordinary volumes within minutes or seconds. Despite ofmy long time observation still i failed to discover consistent patterns to address the exact direction of the market and occasionally losing in this special event in forex trading.

It is one of my great challenge to understanding the forex fundamental that eventually making me losing my interest of studying them to the deepest level and nearly stop in doing so nowadays. I used to ignore the news release and stay away from trading during those turbulence hours. I believe it is enough just to know the fundamental factors shake the market temporarily and use technical indicators to measure the spill over and trade the correction part.

USD-CAD Technical Analysis (24 May 2009)

Recent downturn of USD-CAD is the result of upside major correction which takes place for the 3 months earlier. At this point we witness again that the US Dollar is still not yet recover from weakness against the Canadian Dollar.

Throughout my personal experience this is normal and it shows that USD-CAD recovery is nowhere near. Historical statistic from my observational experience there are two possibilities in this case that the pair might target the middle bollinger band lines of the weekly time frame or worse case back to the bottom.

However since the pair is moving from the top bollinger band line therefore the perfect target with the highest probability should be the middle band line. If it moves directly to the bottom band then it is oversold again. Anyway we do not want to speculate too much in this case because the unexpected can happen anytime. This is proven as it happens time and time again during my years of trading observation and analysis.

Based purely on technical perspective we can expect that the USD-CAD should reverse upside again by the month of June. We will wait and see...

AUD-USD Technical Analysis (24 May 2009)

AUD-USD recent upward movement is one special case that we cannot predict in forex. By right based on weekly slow stochastic and candlestick counting (weekly time frame) it should move down, but in reality it chose to move up (overbought). This is where many traders can fail if they rely too much on their technical indicators and strategies to predict the market direction.

Even though this phenomena happens occasionally but the impact is like losing frequently. At this point you have no idea if the market will continue the overbought or reverse soon. Throughout my long-time observation i have encountered many situations like this and despite of my familiarity with it still i failed to avoid losses when it happens. This is because i just cannot predict when exactly the market will move.

Therefore sometimes i just use my guts feeling to trade and usually close my position if it is not moving according to my expectation after a certain period of time.

beware of long-term trend overbought oversold

Underestimating the market movement usually is the work of those who look for precision in trading. Unfortunately there is no 100% precision in forex. New traders most often over confidence of using their strategy or technical indicators and they tend to overlook the unforeseen danger of market power. As a result they got caught in the middle of long-term overbought oversold position making substantial losses not knowing why it happens.

A short-term overbought oversold situation is not so painful because even if you are wrong the market eventually will move back or make correction just in time for you to avoid losses.

However in long term overbought oversold situation is different as the market may stay that way for a long time like 1 or 2 weeks before making correction. By the time it retraces back you are already collecting a pile of rollover fees (losses). That is certainly not worth the deal as you are making big time loss. Not only you are losing on rollover fees but also the time and money which you may need to trade during the period of waiting the market to comeback. See the example below EUR-GBP pair it takes a month for the market to retrace back.


How to avoid such situation from fooling you? There is no precise answer to this due to the unpredictable movement which caused by fundamental factors that is beyond our control to influence. The very least we can do in this situation is to watch over the price movement closely and check all the necessary indicators like MACD, Slow Stochastic, Bollinger Bands, and Candlestick. If the price movement defies the direction of all the indicators mentioned do not take your chances as the market is moving on a weak ground. Anything can happen either it will continue or reverse no one knows.

Until the market is fully corrected and price action moves according to the indicators direction then you are 90% safe to trade again. There is one indicator that can predict higher accuracy compare to any other in this situation and that indicator is candlestick patterns and counting.

The interpretation of candlestick patterns is when you smaller (shorts) candlestick patterns it indicates weakening market movement, which at this point you should anticipate the market might reverse. Secondly candlestick counting will help you to determine how many white or black candlestick has been formed. If it is 2 you should be aware of reversal might be just near.

Profit Target, Reversal, and Correction point Indicators

Every experience traders developed their own ways of trading and so the indicators they use to determine entry point, profit target (exit point), reversal, and correction point are varies. Where as the beginners or novice usually follow the experienced traders based on their successful experience of using the indicators.

So what are the most used indicators to determine those critical point in forex trading?

1. Slow Stochastic
2. Moving Average Convergence Divergence (MACD)
3. Relative Strength Index (RSI)
4. Chart Formation
5. Candlestick Patterns
6. Bollinger Bands
7. Simple Moving Average Combination (Exponential Moving Average)
8. Fundamental Factors (Economic data release)

Foundation of Technical Indicators (Simple Moving Average) Read
| Candlestick count post analysis Read | MACD, Slow Stochastic, Bollinger Bands Combination Read | Reversal Indicator Read | MACD & Slow Stochastic Combination Read

GBP-USD Technical Analysis (19 May 2009)

As discussed earlier 13 days ago (6 May 2009) in the previous post HERE the Pound-Dollar pair should be forming the second white candlestick until the end month of May. This give us the idea for the whole picture along the month of may the pair is moving up and up. Any minor retracement will follow up by reversal upside as the the market is maintaining its position to create the while candlestick.

As of today 19 May 2009 we are closer to the end of the month rally, the next expectation is that will the pair break the resistance level 1.5385? And if it does there is possibility that the pair might move towards 1.5729 which is 344 pips away. With 7 days we have left can this pair move up to that level at least for temporary stay ;). Let's see...


| Candlestick Counting - Read| EUR-USD Post Analysis - Read | Candlestick count post analysis - Read |

Trade Results - May 06, 2009

Trade Results for the day!


Based on candlestick counting methods, there is high possibility that GBP-USD will formed a white candlestick in the month until the end month of May. This is will give us an advantage to foresee the future movement of Pound-Dollar pair that the entire month of may is going up and up. Any minors and major retracement will only add to the fuel for the pair to go up. We will see this in the end of May.