Chart of the day

Cable made a susbstantial move today up to within a whisker of $1.99. The chart show a series of waves following the classic Elliott Wave format of three powerful impulse waves, in blue, followed by corrective waves in red.

Why look at waves? They show where price is likley to reverse and provide some excellent clues to determine profit taking target levels.

There may be more in the upmove, it has again tested the high shown here, but for today it has moved further than the average for a typical day. However, if the red line is broken on the downside then the wave movement is completed and the next move is likely to be three down waves, an A-B-C pattern.

george@clickevents.co.uk

Cable and the Color Charts

I am often asked, 'What is the best time frame to trade' When I'm day trading I look at the daily down to a 55 tick chart and will take trades based on the 4 minute or 89 tick charts and only if a low risk opportunity presents itself. By low risk, I am only interested if I can set a stop within around 15 pips or so.

As you can see from this chart of Cable, the Color Charts and Gravity Bar help pick out entry and exit points. They must be used correctly of course and the general rule is never trade blind breakouts but wait for the pull back and trade only when the price bar show the 'corner has been turned' with price now moving in the direction of the original breakout.

The chart show a series of entry and exit points that would have produced 5 winning trades and 3 losers netting around 90-100 pips. Of course it's important to take the signals as they occur and not second guess what might happen next or wait for more and more confirmation as that is a sure way to increase risk and miss winning trades.

And the CAD performs....

The Loonie chart followed through from the BAT pattern set up and got moving today as the chart shows.

Immediately following the pattern price formed a broadening formation that is usually followed by a big move.

The rally ran out of steam at the resistance line in blue and sold off following the strong CAD numbers at lunch time.

Is there more to go? The range play suggest there is more in this move but we always like to bank profits along the way. Taking partial profits at this level with stops to break even allows us to take part in a further move entirely risk free.

Loonie update

The USD/CAD pair moved back from making a new high and so the Range Play may still work through

However price action overnight suggests a base is attempting the form. Whilst the very short term overnioght price action has formed a BAT pattern (Bat details here) three higher lows have been formed.

So where to now? The BAT pattern completed at 1.0210 this morning that has the potential to drive price to new lows confirming the range play, this will only be confirmed if the overnight lows are taken out.

The alterntive is for the BAT pattern to fail and resistance is taken out above the blue line, that will set up for a test of the highs at 1.03

And another potential range play

The Loonie is still setting up and now it may be the turn of the Euro. Once again it has dropped to the crtical 1.54 area and a decisive move below could result in a sharp down move but consider the range play possibilty.

The arrows show how many times the Euro has bounced within a very useful range and it could just be geeting ready again. Today we have important US retail sales news that seems to have more potential to disappoint the US$ bulls than the bears so this just might be the catalyst to set of the next Euro move.

Loonie Caves In

The USDCAD pair has moved up eight days in a row now and the weekly chart shows how it has now hit an important are of prior price action that is also a Fib retracement.

At the very least a pause is likely here and it may turn into a channel play. The trick is to wait for reversal evidence away from the channel boundary. Look on the daily charts for Hammers, Engulfing or Harami candles.

Using Color Charts

Cable has turned the corner yet again and the Color Charts gave us the heads up and then where to take profits and again where to go short.

The run up from below 1.96 got us in for a 200 pip up move and then, last Friday (Orange arrow) the Color bar changed to red during the morning session when we took profits. The break down duly came and the short signalled by red bars and line. When will we take profits - on the first blue bar!