The week ahead - 14th -18th June 2010

H4

D1

Weekly

Hi Everyone.

Last week was a difficult week for the 2-3 day trades that I am aiming to catch in this Blog. The markets in my opinion were making corrective type patterns against the prevailing trend. I posted a chart on Friday morning of the Euro$ which seems to have broken down as predicted. I shall look for a elegant entry on Monday morning at 800 GMT. The Eva Mendez pattern as presented on Friday is still intact and a stronger dollar looks very probable.

The $ Cad looks as if a similar trade is setting up. I am going to detail this below as it will give you an indication as to how I look at the various timeframes to spot a high probability trade.

On the weekly chart the $/CAD has made a 5 wave pattern up the chart, taking out the last significant high, followed by a 3 wave pattern down. The market then stops and consolidates at a .786 retracement of the 5 wave upmove, in what looks to me as a partially completed inverted head and shoulders reversal.

On the daily chart, the more recent action shows that the pullback over the last few days is a 3 wave structure exactly to a .618 retrace of the total up swing. I also notice a Eva Mendez setting up, with no confirmation, on the daily. Those of you with experience in Fib and geometry will also spot that the market has stopped its fall at a 0.786 retrace of the range measured from the last significant low. Thus we have a confluence of Fib support measured from two differing ranges. There is also a text book Gartley 222 in process.

The next chart is the four hour, from which I propose to take a signal, if it comes. In the four hour chart I have tried to show the confluence of Fib support, but I admit the chart is noisy for the untrained eye. Also I observe my favourite pattern the falling wedge which is bullish. I have marked the target line from the falling wedge, which approximates the old high. This is 500 points away.

I dont see any signal from the h4 as yet. I will be looking for a bar chart or a candle pattern to enter the trade. The Fib support is about 60 pips lower and I would expect the market to test that again before any turn. Lets just wait for what I hope will be a big trade.

Lets trade the market next week, not the forecast

Enjoy whats remaining of the weekend

David