Thursday, May 21, 2009
Crystal Ball says...
GBP/USD, H4, 22 Apr - Today
Here's an annotated chart to show you how manually drawn trendlines are still good in this day and age of algorithm trading, funky indicators, and scam bots.
A: Prices just bounce upwards along the thick red line I drew. An uptrend line, when correctly drawn, should connect the significant lows of candlesticks. Use the candlestick shadows, not just bodies.
B: The moment the prices breach the trendline, they will continue falling. Should they resume a climb however, they will bounce within the limits of that same trendline which they broke. Notice here that the prices retrace down each time they get near the red line? They'll do this till they breach the trendline and break out of this channel.
C: Prices have moved sideways but are picking up again and headed for the trendline. What I think is going to happen is that naturally they will fall when they wander near the vicinity of the red line. Supporting evidence #2 is the insane RSI on this chart. Way overbought, what goes up has to come down.
I set my RSI levels to 23/77 (default settings are normally 30/70 or 25/75) so that stronger signals can be generated. The RSI is now at 84?? When the RSI begins to cross downwards to head below 77, I'm shorting.
Now. I really should be studying my accounting crap. Not looking at charts. But a chat with Nick in the early morning got me opening up my trading platform for a looksee.