A Trader Walks Into A Bar... Pattern: HOP-portunity On Tap

A free Club EWI resource reveals how bar patterns signal high-probability trade setups

September 29, 2010

By Elliott Wave International


There's a little known joke among the trading community that goes like this: "A trader walks into a bar... pattern: 'Ouch!' "

Fact is, if you don't know what you're doing, price bar analysis can be a bit "painful." Finding a discernable pattern in their grouping can feel like finding a hair in a hay stack.

But if you have the right teacher -- say someone who has used bar pattern analysis for twenty-plus years to signal dramatic moves in some the world's most watched markets -- well, then the discipline is invaluable. And right now, EWI is offering just that, free: the 15-page eCourse Book titled;

"How To Use Bar Patterns To Spot Trade Set-ups" by EWI's chief commodity analyst and Futures Junctures Service editor Jeffrey Kennedy.

In this free 15-page resource, Jeffrey Kennedy shows you the top 6 bar patterns from his personal repertoire. He provides each pattern with a definition, illustrations of its form, lessons on its application and how to incorporate it into Elliott wave analysis, and historical examples of its occurrence in major commodity markets.

Take, for instance, the eBook's section on "Popgun" bar chart patterns. Jeffrey defines this configuration as a "two-bar pattern composed of an outside bar preceded by an inside bar." (See chart below.) From its namesake (the old-fashioned cork-and-string toy gun), popguns introduce swift tradable moves ("the cork flying") that are ultimately retraced ("the string pulling the cork back").















For a real-life example, see the September 27 Daily Futures Junctures, where Jeffrey presents this daily chart of December Coffee that clearly identifies a "Popgun" at the May 2010 low.



















In this comprehensive collection, Jeffrey provides each pattern with a definition, illustrations of its form, lessons on its application and how to incorporate it into Elliott wave analysis, historical examples of its occurrence in major commodity markets, and ultimately -- compelling proof of how it identified swift and sizable moves.

Best of all is, you can read the entire, 15-page report today at absolutely no cost. You read that right. The "How To Use Bar Patterns To Spot Trade Setups" is available with any free, Club EWI membership.

This article was syndicated by Elliott Wave International and was originally published under the headline A Trader Walks Into A Bar... Pattern: HOP-portunity On Tap. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.



Happy Trading!!

Deflation: The Trend That's Become Too Obvious To Ignore

Deflation: The Trend That's Become Too Obvious To Ignore

September 23, 2010
By Elliott Wave International

As the biggest credit bubble in history continues to shrink, consumer prices have stayed flat over the past several months, meaning there is no sign of inflation to come, despite growing commitments from the U.S. government.

So what's keeping inflation at bay, given all the stimulus money promised?

The answer: Deflation -- an overwhelming urge for consumers to liquidate their assets for cash. And this new economic phase is finally becoming too obvious to ignore, as explained in recent commentary from the world's largest technical analysis firm.


"The economy is moving into a critical new phase, an outright deflation in which 'prices fall because people expect falling prices.'

Obviously, this implies an element of recognition, as efforts to protect against indebtedness and falling prices contribute to further declines. We can tell deflation is entering a new stage because of the language and ideas that financial observers now use to describe it."


-- The Elliott Wave Financial Forecast (September 2010)


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Get an independent look at the future of the U.S. economy by reading Robert Prechter's FREE Deflation Survival Guide now. Newly updated for 2010, Prechter's 90-page ebook on deflation reveals the biggest threat to your money right now. You'll learn not only how to prepare for deflation and adapt during it; you'll also learn how to survive it and -- most important -- prosper during it, so you'll be ready for the buying opportunity of a lifetime at its end. Click Here to Download Your Free 90-Page Deflation eBook Now.


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Here are a few recent comments about the new economic reality:

  • "[New Jersey Governor] Christie spelled out the details of his proposal Tuesday. They include: repealing an increase in benefits approved years ago; eliminating automatic cost-of-living adjustments; raising the retirement age to 65 from 60 in many cases; reducing pension payouts for many future retirees; and requiring some employees to contribute more to their pensions." -- Associated Press (Sept. 15)
  • "U.S. Home Prices Face Three-Year Drop as Inventory Surge Looms" -- Bloomberg (Sept. 15)
  • "Atlanta Awash in Empty Offices Struggles to Recover From Building Binge" -- Bloomberg (Sept. 14)
  • "The world economy faces a long, hard slog toward recovery and could slide into deflation and financial instability if leaders fail to deliver on promises of reform." -- Reuters (Sept. 10)
  • "Deflation seems to have the upper hand lately in the debate among investors about inflation versus deflation." -- Marketwatch (Sept. 8)
  • "With the release of the August sales figures, one thing is clear for car shoppers -- it's a buyer's market." -- Edmunds (Sept. 2)
  • "20 Funds to Guard Against Deflation" -- Smartmoney (Aug. 29)
  • "Dividend-Yield Signal Screams Deflation" -- Forbes (Aug. 25)

The word "deflation" also started appearing more in the financial media around 2002, but Robert Prechter, president of technical analysis firm Elliott Wave International and author of the 2002 New York Times best-seller Conquer the Crash, added in the updated 2009 edition of his book that the deflation references back then were in an entirely different context:



"The rarely used word deflation has become fashionable in financial discussion. ... It is fashionable, however, not to predict its occurrence but primarily to dismiss the idea that it has any serious likelihood of occurring.


The president of the Federal Reserve Bank of Dallas said in May [2004] that there is 'maybe one chance out of four' that deflation will occur."



-- Conquer the Crash, 2nd edition (2009)



And Prechter says the opinion from the Federal Reserve Bank of Dallas was not an isolated outlook at the time. Here's another quote from around the same time:


"Not one economist [of 67 surveyed] said it was 'very likely' the economy would slip into deflation, and only 6% said it was 'somewhat likely.' About 95% said deflation was 'not very likely' to happen."
-- Barron's (2003)




In hindsight, we know that economists -- in the aggregate -- were dead wrong about their deflation predictions.



As we saw above, references to "deflation" are increasing now -- because it's obvious.



So if economists were unable -- or worse, unwilling -- to warn you in advance about the threat of deflation a few years ago, what are they not warning you about now?


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Get an independent look at the future of the U.S. economy by reading Robert Prechter's FREE Deflation Survival Guide now. Newly updated for 2010, Prechter's 90-page ebook on deflation reveals the biggest threat to your money right now. You'll learn not only how to prepare for deflation and adapt during it; you'll also learn how to survive it and -- most important -- prosper during it, so you'll be ready for the buying opportunity of a lifetime at its end. Click Here to Download Your Free 90-Page Deflation eBook Now.


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This article was syndicated by Elliott Wave International and was originally published under the headline The "Outright Deflation" Economy Enters A "Critical New Phase".

EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Video: Prechter On Market Rally

Video: Prechter On Market Rally


(Note: This interview was originally recorded on September 20, 2010)


In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about extreme readings in various indicators that confirm his bear-market forecast.






Get Up to Speed on Robert Prechter's Latest Perspective — Download this Special FREE Report Now.

The Ultimate Technical Analysis Handbook

Your Free Chance to Learn How to Forecast Markets Using Technical Analysis
EWI's Senior Tutorial Instructor Jeffrey Kennedy gives you practical lessons -- free


September 17, 2010

By Elliott Wave International

There are two camps of market analysts out there: the fundamental camp and the technical one. Fundamental analysts look at things like the GDP, unemployment, interest rates, etc. to make logical assumptions about where the stock market is going.

Technical analysts use none of that. They look at the market's internals to gauge the trend: things like momentum, trend channels -- and yes, Elliott wave patterns.

And this is your free chance to learn how they do it.

We've put together a free 54-page Club EWI resource for you, "The Ultimate Technical Analysis Handbook." Below is a short excerpt from chapter 3. Enjoy! (For details on how to read this free report in full, look below.)

The Ultimate Technical Analysis Handbook
Chapter 3: How To Integrate Technical Indicators Into an Elliott Wave Forecast
By EWI's Senior Tutorial Instructor Jeffrey Kennedy

I love a good love-hate relationship, and that’s what I’ve got with technical indicators. Technical indicators are those fancy computerized studies that you frequently see at the bottom of price charts that are supposed to tell you what the market is going to do next (as if they really could). The most common studies include MACD, Stochastics, RSI and ADX, just to name a few.

I often hate technical studies because they divert my attention from what’s most important -- PRICE. ... Nevertheless, I have found a way to live with them, and I do use them. Here’s how: Rather than using technical indicators as a means to gauge momentum or pick tops and bottoms, I use them to identify potential trade setups.

Out of the hundreds of technical indicators I have worked with over the years, my favorite study is MACD (an acronym for Moving Average Convergence-Divergence). ... Even though the standard settings for MACD are 12/26/9, I like to use 12/25/9 (it’s just me being different). An example of MACD is shown in Figure 6 (Coffee).





Coffee - December Contract Daily Data

The simplest trading rule for MACD is to buy when the Signal line (the thin line) crosses above the MACD line (the thick line), and sell when the Signal line crosses below the MACD line. Although many people use MACD this way, I choose not to... I like to focus on different information that I’ve observed and named: Hooks, Slingshots and Zero-Line Reversals. Once I explain these, you’ll understand why I’ve learned to love technical indicators. ...

Read the rest of the 50-page "Ultimate Technical Analysis Handbook" online now, free! All you need is to create a free Club EWI profile. Here's what else you'll learn:

Chapter 1: How the Wave Principle Can Improve Your Trading
Chapter 2: How To Confirm You Have the Right Wave Count
Chapter 3: How To Integrate Technical Indicators Into an Elliott Wave Forecast
Chapter 4: Origins and Applications of the Fibonacci Sequence
Chapter 5: How To Apply Fibonacci Math to Real-World Trading
Chapter 6: How To Draw and Use Trendlines
Chapter 7: Time Divergence: An Old Method Revisited
Chapter 8: Head and Shoulders: An Old-School Approach
Chapter 9: Pick Your Poison... And Your Protective Stops: Four Kinds of Protective Stops

Get more lessons like the one above in the free 50-page Ultimate Technical Analysis Handbook.

Happy Trading!!

Topping Out?

It looks like the AUDJPY may be topping out. The following 15 minute chart shows a return to a previous high with something that could end up being a head and shoulders pattern emerging.However, the 3 hour chart is showing a possible continuation and has been trending upwards for quite a while.Open up your trading platform and choose your play...Play safe!
Today more and more investors are warming to the fact that psychology moves markets and therefore fundamental analysis, which fails to properly measure mass investor psychology, must be flawed.

Who can blame them? After all, fundamental analysis -- based on past company earnings, rating agency projections and the like -- proved to be of little value during the bust.

There is a better way.

Many investors who monitor investor sentiment readings, study Elliott wave patterns and employ other powerful technical indicators were -- at very least -- able to position themselves to survive the recent decline. Still others were able to turn crisis into opportunity and profit from the volatility.

How'd they do it?

Technical analysis.

You see, technical indicators remove the cloudy, bias-driven assumptions from your analysis and focus on the one thing that moves markets: investor psychology.

Past performance is not indicative of future results -- and that's where fundamental analysis goes wrong. It fails to factor in the psychology that not only moves markets up and down but also leads analysts to extrapolate the current or past trend into the future. That's why fundamental analysts almost always miss major tops and bottoms.

Our friends over at Elliott Wave International employ the largest team of technical analysts in the world. They recognize that optimism peaks before market tops and pessimism troughs before market bottoms. They use powerful and sometimes unconventional tools to help identify psychological extremes that signal high-probability turning points.

EWI's brand-new 50-page eBook, The Ultimate Technical Analysis Handbook, will show you the various methods of technical analysis they use every day and teach you how to use these powerful tools for yourself.

If you're a technician, this eBook is perfect for you. If you're a fundamentals follower, it's more important than ever that you give technical analysis a closer look. Even if you never completely abandoned your fundamental indicators, you WILL benefit from drawing on these valuable technical tools.

Learn more about this free eBook, and download your copy here. Hurry, this valuable eBook is offered free until September 22, 2010


Happy Trading!!

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