12-10-09
5:14a GMT – Shooting stars on the 30m chart have really been providing solid sell signals for me the past few weeks – have you all noticed the same thing? In general if the star is near resistance and is higher than the 10 or so preceding candles (meaning that it qualifies as an ‘extinction’ candle) it has been a very reliable sell signal. Take a look at the 30m chart below with shooting stars circled in blue:
Of course nearly anything has been a good sell signal this week – the EURUSD has dropped almost 500 pips since December 3rd! That includes our signal from yesterday too – we had a near picture perfect pierce of our resistance at 1.4775 with the tip of a shooting star (10:30 GMT on the 30m charts) that was quickly followed by a nice drop. If you missed the first entry the markets were kind enough to provide a second opportunity to enter above 1.4770 a few hours later on a 13:00 GMT rally. I ended up covering at 1.4700 after my third target at 1.4670 was not reached for +75 pips profit.
On to today – you can view the forex calendar here but we have the GBP and CHF announcing rate decisions (12:00 and 8:30 GMT, respectively), trade balances for the USD and CAD (13:30 GMT) and initial jobless claims for USD (13:30 GMT). The news I’m watching closely is the US initial jobless claims. It was a jobs report last week that sent the USD on its major rally and I believe it will be this report that defines the direction of the pair for the coming days.
Daily Outlook: On the 4-hour chart below we can clearly see that after the strong rising trend support was broken the pair has entered into what appears to be a bearish continuation pattern -(aka a “death spiral”). Technical outlook is therefore extremely bearish in the short-term however we have the big news events mentioned above that could thin out markets and make for some aimless ranging in the morning hours.
Trading Idea: I will stay out of the EURUSD until the news has been announced at 13:30 GMT. Until then there might be some (very short-term) trades worth taking at the top of the 30m channel (shown above) where the last shooting star just touched off of. Also a break below 1.4700 will most likely open way to another challenge of 1.4670 for a quick 30 pips. After news events I will look for a shorting opportunity off of 1.4750 with targets at 1.4715, 1.4675 and 1.4640.
(click to enlarge)
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December 10, 2009 at 16:16
http://piphut.com/forum/download/file.php?id=75&mode=view
December 10, 2009 at 16:24
Are u sure david….how u determine that drawing? If u used elliot wave…than can u tell me more…
December 10, 2009 at 16:41
It’s just a theory, that I see happen all the time
the A wave gets exausted
the B waves turns into a flag
the C waves can be brutel
December 10, 2009 at 17:00
Its called elliot wave right…Ok….i’ll find a resource about that…Sory, i’m just a newbie..So, How you draw the pattern….i mean, How you assume B will get touched….
December 10, 2009 at 17:05
David, I like your Charts they are very nice.
December 10, 2009 at 19:35
Its really reach the target…you should open a thread about this… :) just a suggestion…
December 10, 2009 at 19:52
I agree David, feel free to start a “David’s Elliot Wave analysis” thread in the forums under “Trading Systems”.
December 10, 2009 at 20:37
I’m a total amateur at EW, but sometimes it just stares right at me on the charts, seems to be to many if this or if that!
December 10, 2009 at 19:45
David, Your chart looks like it is working out, I don’t know how that Elliot stuff works but I must learn it.
December 10, 2009 at 19:49
Despite my disdain for all technical indicators I like Elliot Wave theory because it deals with the psychology behind the market, just like candlesticks do.
Wikipedia actually has one of the better write-ups on using elliot wave – http://en.wikipedia.org/wiki/Elliott_wave_principle
December 10, 2009 at 19:52
Yeah, I am kinda amazed how Davids Chart is panning out. Thank you btw way. I did good today and I owe it to you. :)
December 10, 2009 at 19:56
Did you catch the shooting star off the 1.4750 resistance?
December 10, 2009 at 20:01
Yep It worked out perfect:) Did you see my little message razing you about AZ and the snow.
December 10, 2009 at 20:05
I read something about the cardinals and couldn’t read anymore ;). I do like Fitzgerald a lot though. He’s talented and seems to have a good attitude. I’d get on you about Warner being past his prime but I’m a Favre fan so…
December 10, 2009 at 20:10
LOL! I was all star stuck when Farve was here. I only live like 30 miles from the stadium. ( I’m pathetic I know ).
December 10, 2009 at 21:37
according to your chart its selling time now, you gonna short on good signal?
December 10, 2009 at 22:24
Nope, I don’t like to trade this time of day, big news out of china in about 4 hrs.
December 10, 2009 at 22:27
k
December 10, 2009 at 16:38
I hope someone got in on that shooting star at h1 chart at 14:00 GMT right at our resistance of 1.4750. Personally I missed it as I was shoveling snow :(.
December 10, 2009 at 16:41
i feel sorry about that..waiting for the second wave right now..:)..hey,,there already snow at ur place…my place doesnt have snow…..is it beautiful mark?
December 10, 2009 at 16:44
It is pretty but it quickly loses its luster when the wind chill is -35 C (-30 F).
December 10, 2009 at 16:44
Yep. Hey Mark how’s the snow. Ya know if you lived in AZ you could root for the Cardinals and not worry about snow:)
Thank you for your advise on the shooting star this morning.
December 10, 2009 at 16:50
im learning about japanese candlestick after piphut give the signal….its quite interesting…i’m just two weeks in forex world… :) hope all da senior can teach me and give good advice… I’m from Malaysia….
December 10, 2009 at 16:59
Hi Mark
Yes got in at 45 and already added to my position.
December 10, 2009 at 17:03
Hendrik, Those doji’s aren’t making you nervous? If not why? I believe it’s going down but kinda nervous about those doji’s.
December 10, 2009 at 17:41
Yesterday I brought my sl to breakeven and I was taken out and never re-entered — to my own loss. So today, I let it go — the trend is down and I’m riding it out till 4670 or maybe a trailing stop.
December 10, 2009 at 17:17
Well, I got in on it at 1.4732 and got some of it.
December 10, 2009 at 17:31
Sorry to hear about the shovel’n frezzer flakes taking you out of the trade Mark. I got in at 1.4747.
December 10, 2009 at 16:43
there is shooting star at M15…
December 10, 2009 at 17:20
I missed the trade at 1.4750 today :( but the 1.4710 support line looks kinda tough there, plus with that 16:00 doji..Mark would it be right if i aim for an entry to the 1.4675 support if it breaks the 1.4710 support?
December 10, 2009 at 17:22
My bad let me rephrase that. What I meant was “to aim for an entry and target the 1.4675 support line after it breaks the 1.4710 support.”
Thanks :)
December 10, 2009 at 17:37
i think price will move up first until 1.4727 or around that to have a big wave of sell since stochastic already in overbought position at m1 until m30…
December 10, 2009 at 17:43
It can stay there for some time so do not give up!!
December 10, 2009 at 17:45
Waiting the price to breakout the channel…There must be some momentum to move the price downward. Is it correct?
December 10, 2009 at 17:58
the market going 2 days good with clear signals -im happy if this continue till new year :)
December 10, 2009 at 18:00
the Elliot Waves analysis from David was right !!! keep posting please
December 10, 2009 at 18:31
I guess they did not want us down under 1.4700
December 10, 2009 at 18:40
Money goes in the direction of the highest interest rates, im not sure if its true, but it makes sence in my unexperienced head anyways. So if something more doesnt happen soon… (like higher us interest rates) EURUSD should start drifting up again.
Makes any sence?
December 10, 2009 at 19:01
Markus you are right with one caveat: money goes in the direction of the higher interest ONLY IF there is sufficient risk appetite in the market. If markets become risk adverse we generally see a return to safe havens, such as the USD.
December 10, 2009 at 19:18
Ok that makes sence, thanx Marks.
Theres one thing i dont quite get, why is the USD considered a safe heaven today, it seams to be in a lot of trubble with its huge debt and all.
Or maybe thats why we dont see much action at all in any direction right now?
December 10, 2009 at 19:21
A few reasons, mainly because it is world’s standard reserve currency. There has been some rumblings recently of replacing it with a basket of currencies/commodities but that is still just talk and won’t happen overnight. So it is the de facto standard because it has been for so long.
Second, because despite all the debt, spending, etc, the US is still considered one of the safer economies to invest in – returns might not be as spectacular as developing countries but it is seen as a more stable investment.
December 10, 2009 at 19:29
Exelent, thanx for answer Mark.
December 10, 2009 at 18:57
The 1h candle is starting to look bully.
December 10, 2009 at 19:04
This might be a stupid question but is anyone still looking for the test of 1.4675
December 10, 2009 at 19:08
maybe not..coz H1 already shows a hammer….i think i gonna stay away from the market and sleep…nite everybody….
December 10, 2009 at 19:46
My SL got hit at 30pips profit. Thanks again Mark!!
December 10, 2009 at 19:48
:)
December 10, 2009 at 19:55
Yesterday i thought it looked like it made a wedge, or bearish flag… (im not sure if the same thing) Then it fell out of it. Now i think it looks like its making another one. From the lowest low and highest high yesterday. (1h chart)
December 10, 2009 at 20:33
Not sure I see what you are seeing Markus, I see another bearish consolidation triangle. here’s the 1h
http://piphut.com/forum/download/file.php?id=76&mode=view
December 10, 2009 at 20:41
Yes the later one is the one i was looking at yesterday and today.
So hopefully this means we have another drop to expect:)
December 11, 2009 at 00:47
Hi guys, so this means the direction will follow the “flag pole” right?
December 11, 2009 at 03:56
Thanks Mark for the 50PIP great analysis.