Detecting Profitable Patterns For Active Traders
Successful trading without having to be right about the underlying market direction
WEDNESDAY OCTOBER 7, 2009 06:04 ET
Yesterday’s focus on gold proved rather timely and the patterns alluded to in that discussion are continuing to reveal themselves in all time frames.
The chart below is the 30 minute chart for spot gold as of about 10am London time on Wednesday, and the slight variation on the orthodox cup and handle pattern still provides evidence that the dis-believers are being forced to cover anxiously on the breakouts.
In big picture terms the suspicion is that players in gold and S&P futures are playing a high stakes poker game where the bluffing is becoming worthy of another sequel in the Ocean’s Eleven saga.
The S&P 500 put in another stellar performance yesterday and is on the point of taking on the key diagonal trendline marked on the chart which is the trend-line up from the lows since early September.
The Ichimoku positive cross over on the hourly chart is a positive indicator but today’s action, if the market pulls back, could lead to a negative crossover on the daily chart.
My instinct would be step aside in today’s session as the probability of some heightened volatility is increasing.
The GBP/USD chart shows that sterling is approaching a test of a key support level but the larger picture shows that a prominent descending wedge pattern is developing.
The weekly chart for the USD/JPY cross rate shows that whereas the US dollar part of the currency pair is approaching multi-month lows there is not the strong evidence from the momentum indicators that this move downwards has reached any kind of climax yet.
TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY OCTOBER 7, 2009
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
ZMH Zimmer Holdings Inc.
Zimmer Holdings (ZMH) made a valiant rebound effort yesterday but the possibility still exists for a further drop as the volume characteristics are suggesting.
CMED China Medical Technologies Inc.
China Medical Technologies (CMED) has a bullish pullback pattern with supporting evidence from the volume chart.
GS The Goldman Sachs Group Inc.
Goldman Sachs (GS) registered a rather notable hanging man candlestick pattern on above average volume and should be monitored today for indications of corrective behavior.