Gold is the purest charting market of all. The Gold market always rings a bell at major turning points. Gold has been in a bear trend since the 2011. Well, guess what ...
https://www.peterlbrandt.com/wp-content/uploads/2016/02/Factor-Trading-bottom-in-prescious-metals.jpg600900Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2016-02-13 13:34:082016-02-23 14:01:58Has a new bull market in Gold begun?
This post looks at the present forex markets through the lens of classical charting principles, as originally forumated in the early 1930s by Richard W. Schabacker, editor at the time of Fortune Magazine. Factor LLC is recognized as one of the world’s preeminent authorities on classical charting principles as applied to the futures and forex markets.
There are a number of forex crosses that indicate substantial trading opportunities for traders willing to hold positions for weeks or even months.
Before examining the current forex markets, a basic understanding of classical charting principles is approriate.
Charts simply show where a market has been, what it is doing now, and what the path of least resistance might be. Classical charting is simply an attempt to define market behavior in geometric terms. The real edge provided by classical charting comes from the marriage of risk management with well-defined geometric patterns.
There is no magic in price charting. Charts do NOT predict the future. Unlike some Elliott Wave adherents who attempt to label every zig and zag, I believe that the vast overwhelming majority of markets the vast overwhelming proportion of time cannot be understood through the lenses of classical chart principles (or any other method of technical analysis, including Elliott Wave Theory).
Well-defined chart patterns naturally provide opposite possible outcomes. A rectangle can complete in either direction. A rising wedge can become a running wedge. A symmetrical triangle can fake a trader out in more ways than imaginable. A H&S pattern can become a H&S failure. And on and on it goes.
Charts are subject to morphology. I do my best to always find a geometric explanation for price action. As a chart morphs it can be subject to different geometric construction. As a general rule, intraday charts morph more often than daily charts, daily charts morph more often than weekly charts. But, more often than not a market cannot be explained easily by geometry. It is then time to find another market. This is why I might be focused on Robusta Coffee one day and some foreign stock index another day. I want to focus on markets I can define geometrically.
Reliable chart trading is cyclical. There are periods during the year (an average of two periods lasting two or so months each) when an unusual number of markets form well defined patterns AND the markets respond to those patterns in predictable fashion. Using language of farming, this is time to make hay. During the other periods we rely on aggressive risk management to limit our losses and keep out pile of chips somewhat intact.
It is a thing of beauty when classical chart configurations work. It is a thing of frustration when they do not work. It is a thing of confusion when the majority of markets defy definition from a classical charting perspective.
A review of selective forex markets
Eurocurrency (EUR/USD)
The long-term trend (as featured by the 45-year trendline) in EUR is under threat, as shown by the quarterly graph. The dominant chart construction is the 6-1/2 year descending triangle completed in Jan 2015. This pattern has a target of $.84. Such a decline would likely be accompanied by a massive change in the European Currency Mechanism (ERM).
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https://www.peterlbrandt.com/wp-content/uploads/2016/02/Chinese-Yuan.jpg158319Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2016-02-08 08:23:442016-02-08 16:34:17Japanese Yen is attempting to break out of a major H&S pattern.
There are some signs that the 4-plus year bear trend in the precious metal markets is coming to an end
As I have pointed out always constantly, I hate trading Silver. Silver can move $1 one way or the other and mean nothing technically. Gold is a technically honest market, and usually the leader. All things being equal, I would much prefer to trade Gold rather than Silver.
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https://www.peterlbrandt.com/wp-content/uploads/2016/02/Factor-Trading-bottom-in-prescious-metals.jpg600900Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2016-02-03 12:30:082016-02-03 12:30:08Bottom in Precious Metals???
If you are a trader, you will relate When an archer is shooting for nothing . . . he has all his skill. If he shoots for a brass buckle . . . he is already nervous. If he shoots for a prize of gold . . . he goes blind; or sees two targets […]
https://www.peterlbrandt.com/wp-content/uploads/2016/01/peter-brandt-Trading-wisdom-from-2400-years-ago.jpg564850Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2016-01-27 16:04:172016-01-28 13:35:09Trading wisdom from 2,400 years ago
Note: The post herein was absolutely wrong on the analysis of the H&S top in stock indexes. Guess what -- traders are wrong from time to time. I make bold calls and some are right and some are wrong. At the end of the day, price is king and nothing else matters. Members of the Factor research service know that I over-rode the analysis herein on January 6, cautioning that the stock market had deep internal trouble.
Classical charting principles have rules. The Head and Shoulders is a classical chart configuration. The apparent and well-advertised H&S top in the U.S. stock indexes do not meet the rules.
Perma-bears, a H&S top is not sitting for you under the Xmas tree!
Sorry to all of you stock market doomsayers, but labeling the U.S. stock index charts as H&S tops just does not work.
Volume is an important criteria upon which to judge the validity of the H&S patterns. Richard W. Schabacker (Technical Analysis and Stock Market Profits), and later, John Magee and Robert Edwards (Technical Analysis of Stock Market Trends), are considered the pioneers in classical charting principles. According to the founders of classical charting, as a rule volume should be greatest in the left shoulder or head and lightest in the right shoulder in order to validate a H&S pattern.
As the charts of the Dow Jones Composite, Dow Industrials and S&P 500 show below, the largest slug of volume has been in the right shoulder. This is NOT a sign of a valid H&S pattern, thus the interpretation of a H&S top in the U.S. stock index charts is not likely to be correct.
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https://www.peterlbrandt.com/wp-content/uploads/2015/12/Xmas-tree-HS2.jpg242357Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2015-12-23 12:53:542016-01-28 14:50:46The U.S. stock indexes are NOT making H&S tops!!!
The MSCI Index appears to be rolling over in a right shoulder of a significant top pattern. One must be blind not to notice the similarities between this potential top and the chart top completed in 2008. Also, notice how the right shoulder held at the 6+ year trendline. The completion of the H&S top would also violate the trendline. A completion of this top could lead to a decline toward 1400.
But I am NOT a doomsayer. In U.S. stocks I am NOT a bear and I am NOT a bull. In fact, I believe the S&Ps will remain in a range of 10% above the recent high to 10% below the recent low for the next five to eight years.
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https://www.peterlbrandt.com/wp-content/uploads/2015/12/msci-world-1.jpg505899Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2015-12-14 08:37:352016-01-28 14:51:31The Chart of the Month — MSCI World Index building a top??
Has a new bull market in Gold begun?
/by Peter BrandtGold is the purest charting market of all. The Gold market always rings a bell at major turning points. Gold has been in a bear trend since the 2011. Well, guess what ...
Japanese Yen is attempting to break out of a major H&S pattern.
/by Peter BrandtA chart analysis of the forex markets
This post looks at the present forex markets through the lens of classical charting principles, as originally forumated in the early 1930s by Richard W. Schabacker, editor at the time of Fortune Magazine. Factor LLC is recognized as one of the world’s preeminent authorities on classical charting principles as applied to the futures and forex markets.
There are a number of forex crosses that indicate substantial trading opportunities for traders willing to hold positions for weeks or even months. Before examining the current forex markets, a basic understanding of classical charting principles is approriate.A review of selective forex markets
Eurocurrency (EUR/USD) The long-term trend (as featured by the 45-year trendline) in EUR is under threat, as shown by the quarterly graph. The dominant chart construction is the 6-1/2 year descending triangle completed in Jan 2015. This pattern has a target of $.84. Such a decline would likely be accompanied by a massive change in the European Currency Mechanism (ERM).Bottom in Precious Metals???
/by Peter BrandtThere are some signs that the 4-plus year bear trend in the precious metal markets is coming to an end
As I have pointed out always constantly, I hate trading Silver. Silver can move $1 one way or the other and mean nothing technically. Gold is a technically honest market, and usually the leader. All things being equal, I would much prefer to trade Gold rather than Silver.Trading wisdom from 2,400 years ago
/by Peter BrandtIf you are a trader, you will relate When an archer is shooting for nothing . . . he has all his skill. If he shoots for a brass buckle . . . he is already nervous. If he shoots for a prize of gold . . . he goes blind; or sees two targets […]
The U.S. stock indexes are NOT making H&S tops!!!
/by Peter BrandtNote: The post herein was absolutely wrong on the analysis of the H&S top in stock indexes. Guess what -- traders are wrong from time to time. I make bold calls and some are right and some are wrong. At the end of the day, price is king and nothing else matters. Members of the Factor research service know that I over-rode the analysis herein on January 6, cautioning that the stock market had deep internal trouble.
Classical charting principles have rules. The Head and Shoulders is a classical chart configuration. The apparent and well-advertised H&S top in the U.S. stock indexes do not meet the rules.
Perma-bears, a H&S top is not sitting for you under the Xmas tree!
Sorry to all of you stock market doomsayers, but labeling the U.S. stock index charts as H&S tops just does not work. Volume is an important criteria upon which to judge the validity of the H&S patterns. Richard W. Schabacker (Technical Analysis and Stock Market Profits), and later, John Magee and Robert Edwards (Technical Analysis of Stock Market Trends), are considered the pioneers in classical charting principles. According to the founders of classical charting, as a rule volume should be greatest in the left shoulder or head and lightest in the right shoulder in order to validate a H&S pattern. As the charts of the Dow Jones Composite, Dow Industrials and S&P 500 show below, the largest slug of volume has been in the right shoulder. This is NOT a sign of a valid H&S pattern, thus the interpretation of a H&S top in the U.S. stock index charts is not likely to be correct.The Chart of the Month — MSCI World Index building a top??
/by Peter BrandtMSCI World Index forming a massive 2-year H&S top
The MSCI Index appears to be rolling over in a right shoulder of a significant top pattern. One must be blind not to notice the similarities between this potential top and the chart top completed in 2008. Also, notice how the right shoulder held at the 6+ year trendline. The completion of the H&S top would also violate the trendline. A completion of this top could lead to a decline toward 1400.