Monday, 31 January 2011


No CL touch at the first arrow on the blue fork gave me some thoughts that the mkt may rally earlier this afternoon. After failure and mini double tops at 1332 the RT was a.382- Then a break through the d-sloping RL with a strong bar and stoch ribbon divergence & rising B-line.
unfinished............ more to come when time permits

Gold & €$

Was that just a Fib bounce off the 61.5% RT level or something more? I suspect so as the current low is on the first warning line under the LMLP from the new fork. Gold has not carried through after Fridays close and looks weak but i would like to be convinced otherwise. Another test of
$ 1300 now looks more than likely if we break through the reaction line under price at 1322.00
If i start to get excited by this market i will post any thoughts.

The Euro looks poised to have another go at the median and reaction (there is one of each) lines at 1.3760-ish level. See previous posts for more info on these forks/RL's

Lastly The FTSE and other stock index futures look weak even after a bounce off the ML at 5777 (Mch11) and this market looks set to retest this area and a break of the trigger line would initiate a sell stop setup for me.( more on this and the trade plan if/when we get there)

Sunday, 30 January 2011

Gold & €$ + the Russell 2000 e-mini.

I have for some time been sharing on this blog my take on reaction line theory and have today a superb few charts to post.
Starting with Gold are two very basic charts (Comex GC #F) with no reaction lines just to demonstrate which forks are in play and remembering my belief that price is never influenced just by one fork but but multiple forks in multiple TF's.

Friday as expected saw a test of $ 1300.00 and this was dramatically rejected as can be seen here in the first two MT charts. The long term ML that sits at 1309 level (yellow in one pink in the other) provided ample evidence that this market seems reluctant to go lower. The reaction line that i posted about last week is now underneath price and it was this RL that i believe was responsible for bringing price lower and i think this was adequately proved.

Now we can take the process one stage further by looking at the structure of Fridays price action.
If (as i think is highly probable) this ( 1308.07) is a new low pivot of some distinction, then i can apply my rules for a new reaction grid.It can be superimposed on existing grids. This fork (in white) is significant (& has a good angle of ascent) as it maybe part of/ 'the seed' of a new controlling /impulse swing. The pivots P0,P1 &P2 are used- the fork is drawn using the MQ4 custom indicator and the automatic RL & WL's are included( deep red for all reaction & warning lines) with the RL's extended from beyond the upper & lower MLP's. The option of using pivots 3, 4 & 5 is discarded as having first tried this fork (in all 3 forms: basic then Schiff & finally mod Schiff) there is little or no correlation with price action.
But with the fork shown here you can now observe a remarkable correlation between price and the various median & RL (includes warning lines).
After the new low at 1308.07 price retested the pink/yellow supporting ML twice. The second time making a HH and bouncing of the area of confluence of the warning line from the new up sloping white fork and the CL of the DS deep pink fork (arrowed) plus yet another long term RL that runs parallel with the pink/yellow long term median line. It is significant that price action from this point onwards was dramatic with good long candles with excellent separation and offered a strong tradeable trend. For the entry process i suggest using the B-line Stoch, MaccyD, Bolly bands or Keltner chnnls and the 'sling shot' setup of which there was at least one possibly more. Also there were countless retouches/small continuation patterns at the various reaction/ median lines.
( The dark blue ML are all Schiff or mod Schiff)

Here is some low TF detail where the RL & WL's are working well.

So...The Big Question....Where from here? There is a Dragon pattern of sorts with head/tail/feet & back but more importantly in one of my templates above there is a recent retouch (at the .382 Fib RT level) of the UMLP of the aqua blue D-S fork. All centre line objectives have been reached but expect to see consolidation after such a move before a break out higher. Any retracement of more than 50% would be alarming and suggest another possible retest of the $1300.00 level but i doubt this & will be watching & waiting to see if price is going to have a crack at the 1350.00 (1346-1348). Before then it must break up through various reaction line opposing price but never forget the fundamental picture re the Middle East which may provide further stimulus for the technical picture.

I still have the same view as last week but i am encouraged by the DX finding support. I favour the downside for the Euro if we see a LL- which we should as after the recent January strong move up from about 1.29 to 1.3750 we have not even seen a 23.6% retracement yet but like last week i am flat and out until we have a confirmation of a new trend down or a resumption of the old trend upwards.

Russell 2000 E Mini

I chart this market daily only but have been watching another reaction line that seems to be causing some serious resistance. For some weeks i have been bearish on the all stock indicies, and especially the FTSE but am too impatient for price to play out over time

Here is the FTSE (March 11). A break of either trigger line (5800 level ) would be very bearish.

Friday, 28 January 2011

No Posts today

Off to the dentist with a bad painful tooth.

Thursday, 27 January 2011


If a market can only send you signals then they were all there to see with Gold today.( see the three small charts). The failure to break above the RL after last nights rapid rise. The sell-off this morning and then the pattern at the RL around the .618 Rt level should have told/warned me. I had a OK profit result last night and was very lucky not to loose money today but for a market so strong last night it seemed incongruous to have more than 50% RT and we saw no energy at all today- Put it down to professional/Interbank selling . I have never cared whether a market goes up or down but seek simply to see a trend clearly. There is no doubt if you have read previous posts how important this level was and now the technical picture for gold is very bearish and i will look for a short position to see the first test of 1300. Any MT setup to be posted.


Here is the Euro. I have been feeling since last Friday a bit lost & unsure with the Euro. It has looked strong and trended well but we have run into a significant level of resistance and a possible top. This is of course the .618 Fib RT level from the drop from 1.4280 to 1.2872 but more importantly is the CL of the monthly fork (with pivots 1.0337 Aug 97-.8175 Oct 00-1.6041 July 08). We have seen this ML before in this blog when it effectively supported and resisted price back in Nov last yr. (link)
In the E-Signal chart it is shown as green and in the MT charts as yellow or mauve/magenta.
I am still unsure of where from here but a clear break up though this line on the daily chart would be very bullish but the DX seems supported at the 77.70-78.00 but nothing would surprise me. This is why i am flat on all euro $ positions until i see a clearer trend...but for the moment I still remain bullish.


Now that what i call a confirmation bar...with a little help from US data but i would still wait to see price above the thin grey LMLP before considering any long pos


This is make or break....... On the pink LMLP and being supported by the RL at the confluence of both. Wait for the confirmation bar

Gold & USDX + €$

If price does not hold here it is looking as though we will see 100% RT or more and then a puncture of the 1325 level and a drop to test 1300. No one is more surprised than me as the sharpness of last nights rally looked very promising. We are in the zone .618-.764 but there are no certainties in these markets.

The Euro has turned as far as i am concerned and we have seen the highs this morning (re Davos comments) see below


OK, Following on from yesterday posts. We need to see if we are going to see a shallow RT or more. We are already on the pink CL which is a tad over the.382

Wednesday, 26 January 2011

Gold Final final

Gold- Final

OK, As per previous post- This could be a most important reversal. We should/may go into a series of expanding pivots before breaking out upwards. One thing is for sure- The range has shifted upand we are now looking at this RL as major support. It doesnt matter if it goes below a buck or two but should hold its bullish momentum..Please remember that this is an opportunity to get long Gold at a critical reversal confirmation level.
Off for my supper and bed. GOODNIGHT


Price action is very steep and suggests to me that price might go through the RL. Both CL's (pink & grey) from both available pivots have been hit.
Here is a chance to pick some crumbs off the floor and get long either
1. on shallow RT (using the B-Line short 7 long stoch indicator & MACD 7-10-50) to the RL indicated in the small screen charts.
2. On break above ther RL (perhaps tonight in Asia or Euro session tomorrow) and wait for the retouch which should be confirmed in the 15 or 30 min TF.
All this depends on price keeping up its bullish tempo. If it goes back to the LMLP of these forks its all over- forget it -and look for a short entry in my opinion but this looks less likely now.