Best Dressed List 2012. Last year’s best examples of classical chart patterns.


If you cannot read the embedded pdf, click here


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The Japanese Yen is over sold — oh, really?

The word on the street is that the $USDJPY has moved too far too fast. Nonsense!

There is no doubt but that the Yen has been a big mover since October 2012. But, I am hearing many traders say they want to fade this trend — that the move has been too much too quickly. Really?

Shown below is the daily chart of the $USDJPY spot and the Yen IMM futures (the IMM trades at an inverse to spot). The moves have been huge — and very profitable.


But, this 3+month advance in spot must be placed into historical context. Shown below are longer-term charts — the first showinig the spot crossrate expressed in Yen per USD and the second showing the value of the Yen in USD. As these charts show, the Yen has mot moved much at all.


1.15_USDJPY_monthly spot

The weekly chart of the $USDJPY displays a H&S bottom with a minimum target of 92.70. Targets of 94.50 and 100.00+ [and as high as 125.00) also exist. Fear that this market has moved up too quickly has resulted in plenty of sold-out bulls. There is nothing more bullish than a huge supply of sold out bulls waiting to buy the first big dip.


Markets: $USDJPY

The January Forex Effect — 2013 edition


If you have difficulty with the embedded pdf, click here

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Markets: $EURUSD

I think I know what the Gold market is doing


Gold may be showing its hand — and the hand could be a real winner for the bulls

On November 20 I posted a chart history of the Gold market. Click here to see this special 43-page report.

Two points I made in the report were:

  1. Gold is purest technical market in the world
  2. Significant trends in Gold are nearly always announced in advance based on the chart structure -Gold nearly always shows its hand in advance for those who are watchful and unbiased

Well, Gold may be showing its hand.

The monthly closing price chart below speaks for itself. Gold has been in a powerful bull trend since the 2001 low and no clear top has been formed. Absent a clear chart top, the default assumption must be that the period since the August 2011 high will serve as a continuation pattern. However, a decisive close below the 2012 low would be an indication of a top in Gold.


The weekly chart shows that Gold has formed a very clear 15-month rectangle pattern. This pattern is the key to the long-term trend in Gold — whether the up trend will remain dominant or a new downtrend would emerge. In the meanwhile, Gold must be considered as trendless on a weekly basis.


Here is where it gets interesting. Often times in the late stages of a prolonged weekly chart congestion a daily formation will develop to serve as the launching pad for the completion of the weekly chart configuration.

The daily chart in Gold displays a possible 3-month channel. A breakout of this channel could provide the springboard for the completion of the weekly rectangle.


Readers should keep in mind that I deal with possibilities, not probabilities. Most chart patterns fail, leading to a continued morphing of a congestion area. This current daily chart channel would fail to materialize and Gold could drift sideways for many, many more months. However, the possibility exists that this channel would the the last act of this sideways congestion prior to a major price advance.

Markets: $GC_F, $GLD, $IAU



It’s déjà vu all over again — S&Ps gap higher on New Year’s Day for second straight year

The New Year’s Day breakaway gap — if not filled — could lead to an entire year of upside gain

In 2012, New Year”s Day fell on Sunday. The markets were offically closed on Monday, and opened the New Year on Tuesday, January 3.

However, the electronic markets traded on both January 1 and 2, 2012 — gapping substantially higher right from the start on Sunday afternoon’s open. So when traders returned on Tuesday the U.S. stock indexes are sharply above the December 20, 2011 closing levels. While the S&Ps came back down and barely closed the gap on January 5, the Nasdaq never closed its gap and trended higher the rest of the year.



In other words, the New Year’s Gap (2012) was a daily and weekly gap and go.

It is now déjà vu all over again. The S&Ps gapped higher on Monday, January 1, 2013. This gap, if not filled, will be yet another daily and weekly New Year’s Day Gap and Go. Note that the S&Ps could completed a 13-week symmetrical triangle in the process.


Markets: $SPY, $ES_F, $SPX, $QQQ, $NQ_F