General Comments
One of the reasons we watch and study market leaders is that they can sometimes provide clues to market direction. Yes, they often get harder than the broad market at turns (which is why you must trade them—you cannot "buy and hold" them), but leaders which are
General Comments
When markets are in consolidation (i.e., moving sideways) it is very difficult to find strong edges. Markets tend to be more random, and no consistent profits are possible in a random environment. We believe, based on higher timeframe patterns not visible on this chart (but see this post) that
General Comments
This daily chart of ABX shows a stock that may have found a bottom: after several potential bottoming formations, the rally has carried the stock the upper Keltner channel, suggesting that a pullback could be buyable for a long trade and an attempt at catching a trend reversal. However, there
Breakout
The most important levels in markets are those that are clearly visible to all market participants. The July pivot high in Soybeans is a good example of an important level to watch. A failure test (think 2B short entry) at this level would present a serious challenge to the integrity
General Comments
[dc]O[/dc]ne of the challenges developing traders face is learning to manage positions effectively. Think about it for a minute—how many books do you know that show patterns and setups for trade entry? Now, how many do you know that focus on position management? We probably put
General Comments
The bear flag is a pattern that plays out in all markets, though it tends to resolve less clearly (i.e., with more fakeouts and false breakouts) in currencies. Why? I'm not sure, but it could be that the underlying dynamics of buying and selling pressure, while still
Breakout
Volatility contraction is an important element of market action. Essentially, when a market has been quiet for a period of time, there is a higher chance of breakout trades working, or of any sharp move seeing continuation (for several bars.) Though there are many ways to quantify this volatility contraction,
Breakout
Reader Greg asks this question: [dc]R[/dc]egarding your Chart of the day: Bullish Pattern in Aud/Jpy, which as you predicted broke out to the upside. My question is simple...why did you draw it like a flag and not like a range... and how did you spot
Failure Test
Two things to note on this chart of Corn futures: 1) The clean failure test above the summer's highs, followed by a sharp selloff to the bottom of the range. 2) Price is unable to rally strongly off of the support at the bottom of the range. This
General Comments
[dc]R[/dc]eader Jayram asks, " Can you tell what is the significance of the blue & red bar coloring in your charts on the blog?" Sure, Jayram. I use various color rules on my charts, but I do not use them in any systematic fashion (for the
General Comments
Markets alternate between periods of range expansion (usually during trends) and volatility contraction. Breakouts from periods of volatility contraction tend to be strong, and highly directional. This chart pattern in Corn futures highlights volatility contraction near the highs of a recent, large run-up; this is usually constructive and traders can
General Comments
This is potentially a very bullish pattern on the AUDJPY, targeting a move into the high 87's over the next several weeks. Trades should be entered on strength above the trendline (roughly 82.00 in today's trading) against a stop somewhere in the 77.00-79.00