Daily Form August 4, 2009

Detecting Profitable Patterns For Active Traders

Successful trading without having to be right about the underlying market direction

TUESDAY AUGUST 4, 2009       06:46 ET

The KBW Banking Index (BKX) has penetrated above the 200 day EMA and now faces a challenge at the May high and the level on the left hand side of the chart from last December.
Apart from one session on 19th September 2008 i.e. a whipsaw reversal following the demise of Lehman Brothers this index has not been above its 200 day EMA since mid 2007.
Yesterday saw the S&P 500 close above 1000 for the first time since last November which is an undoubted achievement for the optimists and could trigger more buying as skeptics within the institutional world become increasingly uneasy about their procrastination.
Reviewing many ETF charts this morning it seems almost redundant to say that many are breaking above major resistance levels with pathways clear to even more gains as the testing of levels from last August and September are now back on the agenda.
Parabolic rises are quite a wonder to behold and also difficult to question so I shall leave my comments at that for now.

Recent commentaries have looked at the Hang Seng Index in Hong Kong which is now in very close proximity to the 62% retracement of the historic high and the 2008 low.
The Brazilian Bovespa Index is also approaching that same strategic fibonacci level.

The euro pierced above the $1.4330 level in trading yesterday during the North American session which was the high from early June. As the hourly chart below reveals the trading in Europe so far today shows a typical congestion pattern with the volatility bands constricting noticeably.
A turnaround Tuesday in US equities could be the trigger for some back tracking in the Eurozone currency but if the party mood continues on Wall Street the macro fund players will take up the challenge and keep pushing the dollar further down into the basement.

Sterling pierced through the $1.70 level in yesterday’s session and the hourly chart below reveals that the UK currency is in a similar predicament to the euro as just discussed.
On the weekly Ichimoku chart for GBP/USD there has been a bullish crossover pattern and the currency is about to emerge from the pink cloud putting targets in the $1.80’s back in play.
More than anything the sterling chart points to how unloved the US dollar becomes when the risk blinkers come off and hedge fund money seeks out all of the most speculative nooks and crannies in the global markets.


The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions.
None of these setups should be seen as specifically opportune for the current trading session.
For a more comprehensive listing of price formations detected by our pattern recognition algorithms please visit TradeWithForm

ENER  Energy Conversion Devices Inc  

Energy Conversion Devices (ENER) has a bullish flag formation.

SNDA  Shanda Interactive Entertainment Ltd ADR  

Shanda Interactive (SNDA) could be vulnerable as it approaches the level indicated by the arrow on the chart below.