Be a Professional and Skilled Trader - Don’t Let Poor Signals Waste Your Money

by Vahid | Forex Market Analysis and Signals | Sunday, February 10th, 2008

Hello my friends :)

I just finished the article I had been writing about technical analysis and the way you can use it in forex and stock market. I wanted to explain everything about technical analysis in one article but became realized that it it is not a good idea and I have to write different articles for it.

As you see technical analysis is the main thing I use to find the buy and sell signals and according to the weblog users it has been working for them very well. The best and most experienced traders use the technical analysis rules and techniques to analyze the market and find buy and sell signals because after so many years of trading they have come to this conclusion that technical analysis is very important.

Those who are dependent merely on the slow indicators like moving averages can also make profit but they have to have a lot of failed trades to become able to catch a big move that recovers all their losses and makes some profits for them.

I don’t like such methods because…

1- They are too slow and you will be too late in most cases.
2- The market moves against you at the beginning of the most of the trades - even the successful ones - because you see the moving average signals, only when a lot of traders have already bought or sold and want to close their trades.
3- It is not technical and scientific. It is just because on a few lines colors and signals. It doesn’t make you think and analyze the market and evaluate the situation of the Bulls and Bears. A 10 years kid can trade using some moving averages but you can not call him/her a trader.

So technical analysis is the foundation and base of the professional forex and stock trading. Any strategy that you use, you have to be able to find the support and resistance levels, patterns and consolidations. Only in this case you are a good, skilled and scientific trader.

It is not too hard to learn the technical analysis. It is very easy and you just need to spend some time. I am sure those who have been following my daily analysis, have learned a lot about the technical analysis and can use it in their trades.

So learn the technical analysis.

Fundamentals: will be added later.

Ok! Lets check the currency pairs.

1. Euro against US Dollar (EUR-USD)

11:08pm GMT

As you see on the daily chart we have a triple top. It should act as reversal but it is too early to say that if it is a successful reversal signal or not. The thick purple line is the neckline of this triple top. As you know patterns like double and triple tops and bottoms and head and shoulders act as a reversal only if the price becomes able to break the neckline. So the price should go down and break down the thick purple line and it is the time that we say this triple top will act as a reversal. It is possible that it happens in the next a few days or it can take a longer time. As I see, currently the price is going up again. I will let you know when the neckline becomes broken.

On the other hand, currently the price is above the 161.80% and it is highly possible that this level acts as a strong support line and the price goes up.

Currently the prices shows a weak tendency to go up and I don’t see any strong Bullish signal.

The 4hrs chart shows that the 23.60% is broken up but Bulls are not strong enough to take the price higher. Generally I don’t see any new trade and we have to wait by now.

2. US Dollar against Swiss Franc (USD-CHF)

11:59pm GMT

The same situation we have in EUR-USD can be seen in USD-CHF but in opposite direction. The price is stopped by the 161.80% as a resistance. The last two candlesticks show the indecision and uncertainty of the market.

Let’s wait for this symmetrical triangle breakout in the 4hrs chart:

3. British Pound against US Dollar (GBP-USD)

12:11am GMT

It still looks Bearish strongly.

In 4hrs chart, the current consolidation looks like a continuation signal because it doesn’t have enough power to go up and it has already broken down the 161.80% which means it should go down to retest the 261.80% too. If you don’t have any position, you can go short if it breaks down the small green line.

4. US Dollar against Japanese Yen (USD-JPY)

12:33am GMT

So last week it broke up the symmetrical triangle and went up but after that, the Bollinger bands became so close to each other which means there is a very small amount of trades in the market. On the other hand, it is under the 100% level which acts as a resistance. The last three candlesticks show a sell signal but it is not that strong. I go short if it breaks down the small triangle. Smaller time frames will show more details.

Yes; the 4hrs shows a sell signal but we have to wait for the triangle breakdown. If it breaks up the triangle, it will go up to retest the 100% level which is so close and I will not go long because Bulls don’t look strong enough.

5. British Pound against Japanese Yen (GBP-JPY)

01:00am GMT

Like all other previous currency pairs, GBP-JPY is in a uncertainty situation. The price is inside an almost symmetrical triangle and taking any new position should be based on the triangle breakout. As we had a downtrend before the consolidation (triangle), we should expect that the price breaks down but we have to wait and see.

The 4hrs have already shown a buy signal and the price is going up to retest the triangle resistance. We have to wait because the resistance is so close.

6. US Dollar against Canadian Dollar (USD-CAD)

01:40am GMT

It retested the support and went up few days ago but now it is going down to retest the same support level. I expect it to break down the support this time but we have to wait and see.

The gap you see in the 4hrs chart shows the strength of the Bears:

I prefer to wait for the triangle breakout to take any position:

7. Australian Dollar against US Dollar (AUS-USD)

01:58am GMT

A big flag is formed in the daily chart. I could expect it to be a continuation pattern but when a pattern becomes too big, it loses its effect. So I expect the price to go down as soon as it retests the resistance.

The one hour is forming a sell signal. Go short when one of the next candles break down the close price of the current candle (the thick green line) which is 0.9005.



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8 Comments:
post a comment
Comment by leo
2008-02-10 19:00:14

Hi, vahid

Thanks for your excellent work here. And I have check the chart on my soft, and do not see the gap you showed on CAD. It seems you have a missing part on your chart, and better check again.

Reply to this comment
 
Comment by Vahid
2008-02-10 19:06:09

Leo,

Yes; I had never seen such a big gap in forex market. In forex market we don’t have it. I was surprised. Now I understand that it is a bug in my platform.

Reply to this comment
 
Comment by Milka
2008-02-10 20:41:22

Hi Vahid,
I’m using VT trading platform, and there is big gap between 1.0063 and 1.9842.
Is it a bug in platform?
Milka

Reply to this comment
 
Comment by leo
2008-02-11 01:35:33

Hi, Vahid

Thanks a lot for your methods. I have used your method and gained 140pips on GBP/JPY just right now , which broke a triangle on 1H chart several hours ago. And also closed the position according to a reversal signal on 15M chart. Thanks for all your hard and beautiful work these days, they are really helpful.

And I found that only using candlestick analysis, trend line( for support and resistance) and fibo lines can do all the work. No need for more indicators!! The simpler the better.

Best wishes and good luck to your trade and your life!!

Reply to this comment
 
Comment by Dam
2008-02-12 00:10:49

Hi, Vahid!
Thanks a lot for your time and you mind.
You articles and posts are great help to me , and i learned a lot !
I have been trade for few days by real account , i have a question
about the confirmation of signals, when i look at the hourly chart (that
is my favorite choose) i always wate for 2 hours to have a confirmation
about the signal , but sometime the price go directly to the goal ,without 2hourly
candlestikc confirmation, i don’t know it was right or wrong to have 2 candlestikc
confirm, would you lighting me ?!

I didn’t come from english speaking country,so i help my writing will be easy to
read.
Best wishes for you!

Reply to this comment
 
Comment by Hans Weber
2008-02-20 21:25:41

Hi Vahid:

Are you not updating your blog anymore? I really enjoyed your perspective on the movement of the markets?

Reply to this comment
 
Comment by steve
2008-02-29 14:56:19

Where have you been since 2/11? We are missing you vehemently.

Reply to this comment
 
Comment by Eranos
2008-03-03 23:36:35

time to say good bye. thank you!

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