My Pleasure thank you for participating in the community.

Before answering let me say that there are many different ways to look at a chart so there may be some things that you can point out to me that I have not seen on the below chart. Having said this however this is how I would look at the 8 hour GBP chart:


As the triangle as I have drawn it points directly to the right I would call that a symmetrical triangle.

Before looking at the indicators to try and get a better feel for the market I would encourage you first to look at some longer time frames to see what the overall trend in the market is.

Below is a daily of GBP/JPY


Firstly just by looking at the chart it is pretty obvious that the trend is down. While other traders may think differently, I place a lot of weight on this one simple factor and am always going to be biased in the direction of the trend unless there is a very strong pattern which tells me to think other wise.

In this case however in addition to there not being any patterns which would alert me to think otherwise that I am seeing there are actually some that would make me place more weight to my downward bias. As you hopefully remember if you have seen our lessons on Flag and Pennant Chart Patterns when the market drops significantly it tends to consolidate for a while before continuing in the direction it was heading before the consolidation, which can form what is known as a flag or pennant chart pattern which is what we have here.


Below is a weekly chart:


One of the first thing that jumps out at me here is the large head and shoulders pattern which as you hopefully remember if you have seen our lesson on head and shoulders patterns is a classic reversal pattern which in this case worked out almost perfectly. One thing I do see here however is the fact that you could argue on the weekly chart that the market is still in a longer term uptrend as I have indicated with the uptrend line on the chart.

If this line breaks however there is not much below that level in terms of support.

So with all this in mind I would say that my bias would definitely be down in this situation. Does this mean that the market is not going to break higher? No it does not. What it does mean however at least for my own trading is that I would be looking for opportunities to get short should the market break to the bottom of the flag on the daily chart and if the market does break higher then I would probably sit on the sidelines.

I would also like to say here that I just pulled these charts up and took a brief look at them so there may be things here that I am not seeing and if I were going to trade this setup I would do a lot more research before treading it including looking at the shorter term charts to help me pick entry points to take advantage of what in this case would be a longer term trade. With this in mind and as with anything on this site the above should not be looked at as a trade recommendation but simply an educational piece using some of the lessons we have gone over so far.

If there are any other comments or questions on this please feel free to post them below.

Best Regards,
Dave

hi Dave,
I am sangeeth...frm india...I found your videos very useful for trading...I'm now recovering from my earlier losses...What's actually the wolfe wave...If possible kindly post a video on wolfe wave...

vsangeeth

Hi Sangeeth,

Thanks for the comment am glad you are finding the videos useful.

Currently I am working on finishing off the trading basics course but I will put this one on the to do list for after that. In the meantime here are some resources where you can learn about the Wolfe Wave:

What is The Wolfe Wave

Wolfe Wave

Wolf Wave indicator

Advanced Channeling Patterns: Wolfe Waves and Gartleys


If there are any other good resources on Wolf Wave Please Post them below and we can get a comprehensive list of resources on the topic going here.

Best Regards,
Dave

Dave,
I'm new to trading and have really enjoyed your site. I studied hard for several months. I spend a lot of time on your site and others. The only problem is that I'm a really bad trader. I saw the large Assending Triangle in ABX (Jan to Apr 2008) and bought a Call Option on it, but it promptly went down and I lost the money I had invested in that trade and to add insult in injury, the discount broker doesn't offer trailing stops on options so I couldn't catch it. -so the assending triangle in an uptrend as a continuation pattern does not always work.
(I'd recommend changing that lesson a bit to make it sound a little less certain so new traders won't get all excited and crash and burn.) I don't hold it against you Dave. Its just a learning experience.

bob crawford

Hi Bob,

There are a couple of points here that it is important are made very clear here about this site.

1. If you watch my videos you will see that I mention over and over again that hindsight is 20/20, traders should always confirm your analysis with other things, and that money management (learning how to protect your capital when trades move against you) is the most important aspect of trading. This is because if patterns and indicators worked out everytime like they are supposed to then trading would be easy and everyone would be rich.

2. I am not here and this site is not designed as a place for recommendations about how you personally should go about trading. My lessons are general trading education that you can find in many books on technical analysis so they are meant as a general framework only. It is up for traders to come up with their own strategies and decide what works best for them, or to seek advice from a registered financial advisor which I am not.

Trading is risky and as you will see mentioned several times in my videos as well the large majority of people who try trading lose their money.

I apologize for the straight forwardness of my response but it is important from a legal standpoint that I am very clear here.

Best Regards,
Dave

Dave,

As I seen from your post here, you are so right in responding to this post this way. I know when i watch these videos you are merely showing me how to recognize the patterns and in no way can you even begin to "guarantee me that they will go the way that the pattern suggest. WE all should know that past performance is not always indictactive to future performance. Charting is not a science theory, it is merely a way to see what "may" happen, and I guess he should not have had the call option that did not allow him a stop point to get out of his trade.

Wow, I just thought his post was the wrong one, not yours. He was wrong to even suggest that you change the videos... I see nothing wrong with any of them so far.