Is FOREX predictable ?

I suppose it is very easy to be bearish on EURUSD now, right ? If you are, then you're just part of the other 97% of other bears. Do you know what happens when such percentage of the people thinks that a particular financial instrument will go to a certain direction. The market goes in the exactly opposite. That is the nature of the market psychology. And because this is hard to believe for some people, I would like to escort you to a short journey of the market psychology and the way markets trend and reverse. I don't want to convince anyone in anything, but just to show some facts that you may have forgotten.

In September 21, 2009 we published a chart, forecasting the mid term perspective on EURUSD:

http://marketsinside.com/images/stor...usd_210909.jpg

Back then, we set up a target for the top at 1.5100. We warned our readers that now is not the time to buy Euro. Then was the time to close long trades and to prepare for a long bear market. But one of the most important signals, that warned us that there will be a top, was the 97% ot bulls. There was no one else to buy euros. We saw a market top at 1.5150.

But we said, that we expected reversal. All we needed to see was five waves down, followed by three-waves upside pattern and then a breakthrough of the first five's bottom. That happened on January 14, 2010:

http://marketsinside.com/images/stor...usd_140110.jpg

Beautiful five waves down, and three waves up. It was clear and all we had to do was to warn our subscribers and to wait for the market to tell us whether we were right, or not. Couple of days after that chart was sent to the subscribers the market hit our third wave target.

Approximately two weeks after that we published our mid term perspective in an article called EURUSD - One chart, three letters, where gave a clear call, that we're gonna see an intensive bearish rally. Do you know what percentage of the traders thought like us ? 23 !

http://marketsinside.com/plugins/con...a89e647fb4.jpg

Yeah, it is easy to be part of the herd and to loose consistently your money. When 77 % of the people think that the euro is still in a bull market, and you shout that there is going to be, "an intensive landslide", almost nobody is listening. That is the herd magic. Only a few know and see the real future perspectives.

But let's get back to now. Near market bottoms traders' sentiment tends to go in its extreme values. Traders which are emotional and herding often sell near bottoms, and buys near tops.

http://marketsinside.com/images/stor...d_230510_d.jpg

Having this chart by your side, should warn you of what the market is about to do. To surprise the audience, again. Although we might see another low, it is clear that the market is just about to reverse and to go in the bullish side. All the charts you see here are part of articles that were written on our website and everyone could see them. But all the intraday surprises, critical levels, good places to go in the market, targets, market structure, we've been doing all the time. That is what we do in our Forex Bulletin.

Its people like you that put my faith back into elliot wave. I do think that the markets have a structure and they can can predicted. Certainly only certain people can do it and what ever you are charging for your weekly update is well worth it going by the evidence you have posted.


My hat off to you keep up the excellent work.


Mike

your aproch feel little long term or do you have several trades in a day ? or atleast in a week ?


best regards

Thank you buddy. I am supper happy to know that my posts are useful to you ! Thanks again. Best Regards

Public forecasts in are usually on a higher degree charts, such as daily, or 8H. But the insights (1H or smaller time frames forecasts) are part of the forecasting services. Here is a link where you can take a look.

Regards

It is almost impossible that you haven't heard about the biggest buying opportunity in precious metals which you are about to miss if you don't hurry up and buy gold, silver and platinum. The story goes with the argument that in this falling stock indexes environment and the surprising US Dollar, the only and sure Safe Haven are Precious Metals. A few minutes ago I just passed by this typical headline on the web:

"Platinum investment better than gold"

The article is obviously written by some famous analyst who is trying to convince the audience that above all precious metals (in which you're gonna invest your money, for sure), Platinum is the best choice, cause it has the best market performance in uncertain times. I'm sorry, but I can not agree with that advice. Actually I think this particular advice could harm your investments a lot. Why ? Because of this daily chart of Platinum, published on April 27 in our Metals Bulletin:

http://marketsinside.com/plugins/con...cf4e24ba9a.jpg

You can see for yourself what has happened after that forecast was published. The market topped, and turned to downside, breaking the bullish wall. Platinum and Silver have huge potential to make new lows, in sound with the global deflationary tendencies. With that different opinion I express, I recommend you to be in touch with our Metals Bulletin, giving you the best instrument for your trading decision on GOLD, SILVER, COPPER and PLATINUM.

i cant find so mutch info on the link u gave me can u tell me instead ?


best regards

Well, I'm trying to follow the market. Within every Bulletin I publish forecasts for the certain instrument with critical levels (stoploss), targets, and market structure. If the market goes in a different direction and breaks the critical level I publish Bulletin Update, where I post forecast for the new situation. That is why my Forex and Indexes Bulletins are full time forecasting services. In my analysis and forecasts I use technical analysis and Elliott wave theory, as well as sentiment indicators. But I don't post signals. I give market structure, direction, targets that are expected.

You get two chart of every instrument in every bulletin - one in a higher time frame (daily) and one in a smaller time frame (usually 1 hour).

I haven't count the percentage of my successful forecasts, because I'm following every step of the market. If you take a look at the Bulletins Excerpts in my website you will notice that almost every single market move is predicted in the Bulletins.

Hope to be useful.
Best Regards,

There are rare opportunities that markets give us with almost 10% of risk. Well, it is of course a question of risk management that every trader has. But for me, things start with analysis and forecast. That is my way of trading and I think we're about to see one of the most intensive and volatile drops in stock market indexes, since the March 2008 bottom. It is a single chart that I want to show here. S&P 500.

http://marketsinside.com/plugins/con...b2cd4150d6.jpg

As you can see, I've already taken my short trade, near the 1,220 top, and don't intend to close that trade soon. But what is more important is that the wave structure shows that wave iii of iii is just around the corner. As you know, those price actions are the strongest and the most volatile. They literally identify the trend in different time frames. An other thing to notice is the various possibilities for critical levels, which determine the risk management. I do not want to tell which is the most appropriate. It depends on the temperament of every trader. As a good entry point I will surely point the confirmational breakthrough. That is a conservative approach to the Elliott wave trading, but I have to tell you - being conservative is almost equal to being richer on the markets.

Corrective and sideways market patterns give possibilities of good trades too. They are more dangerous and sometimes too risky, it's right, but there are moments when having a few confirmations is enough to be on the market. I think we're come to one of those moments in COCOA. The wave pattern here is Expanded Flat (Irregular Correction).

Although this pattern is very dangerous for an Elliott wave newbie trader, there is a part of it which is developing as a five waves decline. If there are five waves in a certain direction, that's the place for an elliottician to go on the market. In this case I'm talking about wave C. It is suppose to be a five waves decline in the opposite direction of the trend.

http://marketsinside.com/images/stor...a_090610_d.jpg

http://marketsinside.com/images/stor..._090610_4h.jpg


As we can see on the daily chart of COCOA, waves A and B look complete, and the top of wave B is a little bit higher that the top of wave III. That is what makes me suggest that we're about to see a five waves on the downside for wave C.

Waves (i) and (ii) seem to be done, and we're ringing the bell of the wave (iii) coming ahead. A sharp, intensive and volatile market move is what I expect to see during the next few weeks. There are a lot of possible entry points according to the Elliott wave style of trading, as well as critical levels. Everyone has different temperament and will to take risk.

Do you have a http://www.myfxbook.com track record?

Nope.

We've been watching a falling Pound vs US dollar, for quite a long time. Since the beginning of August 2009 we saw a drop from 1.7052 to 1.4240. We were expecting that drop to happen.We followed every impulsive and corrective price action to the downside. But I think now is the time to look at the big picture and to reconsider whether the Pound is going to continue to fall against the dollar, or not. It is always important to keep an eye on the big picture. Actually that is the place every analysis and forecast should start from. In GBPUSD we have different scenarios, we want to show you.

http://marketsinside.com/images/stor...d_160610_w.jpg


In the first scenario, which I use as a primary, GBPUSD is ready to run for another high, above 1.7068. The wave pattern that I expect to see in this scenario is a double ZigZag. This probable rally for wave y is suppose to develop as a three-waves pattern, with A and C impulsive inside.

http://marketsinside.com/images/stor...160610_w_1.jpg


The second scenario is suggesting a triangle for wave B. This pattern takes long time to develop and they are very dangerous for trading, especially for those traders who use automated trading strategies. Be careful with triangles. If this scenario turns out to be chosen from the market, we could relax and wait for the completing of the pattern and choose some appropriate place to be on the market after that.

Notice, that in both of the mid term scenarios, we don't expect continuation of the current bear market. And that's our warning here. If you are short term short on GBPUSD, it will be nice to reconsider the market's direction. There are very interesting surprises that the Forex market is preparing for us.

A reversal occurred. It probably was unexpected, at least if you're not chartist. If you're not, though, you had another place where you could have been warned about that coming reversal. At tops everyone seems to be optimistic and almost nobody could take the idea of a market reversal at serious. Almost nobody is the key sentence here. That warning was given in the following chart from June 06:

http://marketsinside.com/images/stor...f_060610_d.jpg

The reversal is a fact. But the market has prepared for us, the participants, lots of surprises. As always we'll do our best to warn you of a coming major price actions, with targets, critical levels, and market structure. Just like we've done it so far.

The market has an unique feature - to make the last bear turn into bull and the last bull - into bear. Markets are willing to
do anything to confuse you. They can make you fully doubt the scenario that you've choose. Of course, this is not entirely a blame for the market, but rather for us - the participants. Because traders have a feature to choose scenarios that could bring us the fastest and largest profits. Yes, but the market does not comply with what we want, but to the natural laws of mass psychology.

If you do not follow our posts here is likely to think of the next lines as useless, but I assure you, they could hide the key of understanding the best way to participate in the markets over the next year or two.

One of the varieties of fear which manifests itself on the markets is panic. It has very interesting properties as a psychological state of the crowd, but the actual outcrop on the markets is extremely rare and usually comes as a thunderbolt. In such situations, traders fall into total confusion by trying to understand what happens in one market and while they wonder, the same market surprises them again with high volatility. This is the conclusion ... panic = volatility.

http://marketsinside.com/images/stor...0710_panic.jpg

During panic markets have specific behavior. Surprising sales and drastic pullbacks happen literally within minutes. The famous Thursday, May 6, when Dow lost 1000 points in less than 10 minutes. Only ten minutes. Do you think you could have predicted such a development? And in particular - can you guess in which exactly 10 minutes is what going to happen? Technical error or not, time for a cigarette did completely erase the market rise that occured over the past six months! That is the main feature of panic. We expect such incidents to happen in the future. At least until we reach the bottom. However, after panic sales come another very interesting psychological moment - totally boring and confusing consolidations. A 10-minute lightning followed by months of consolidation. That's when the cat and mouse game starts between traders and markets. On one side traders want market to repeat the same 10 dramatic minutes, because most likely they have missed the first. Also considering how much money the next volatility can bring to traders, they choose the scenario which shows the most recent ending of consolidations. On the other hand, the market because of its innate arrogance and sarcasm, decides to continue with more and more consolidation, bringing absolute and complete confusion to traders and in some cases even boring attitude. The problem comes when you decide that you're already bored and tired of you wondering when the market will end this awful consolidation, it decides to repeat those 10-20 minutes, of which you've dreamed during those 30 days . Yes, bored attitude against markets leads to slow action. You may again miss the big profits again.

This is it panic on the markets. Surprising, fast, powerful movements, followed by a long and confusing consolidations, which also has serious moments of high volatility. Do not get bored. We live in interesting times.

While I was fumbling through my computer trying to find a classic caricature of Chuck Norris, I
came across something, that I admit I had forgotten. It doesn't concern only financial markets but also how we humans behave. How emotions guide our development. It is a simple chart, which, however, reveals how our emotions go from one extreme to another. On their way, they go through the so long studied, worshiped and calculated with bizarre formulas equilibrium. Economical, financial different social systems' equilibrium exists. It is a fact. It's only that it takes just as long as to feel it, to enjoy it and then to consider that it will last forever. And because our mind wants to see equilibriums around us, it is trying its best to deceive us that people are rational, and therefore, we strive for balance. It's just like human behavior can be predicted with some logical formulas and whoever has a Japanese calculator (like a brand new CITIZEN), he will win more money on the markets. That, basically is the idea of the professors in most of the universities of economics. Of course, they prefer to enjoy their theory without ever tried it in practice. We all know why.

Yet the reason for the human behavior is not rational but emotional. Our emotions flip from one extreme to the other and thus shape our reality. Speaking of extremes, let's get back to the chart.

In February 2008 I published in several forums a forecast of one of the main indicators for the development of the American economy - Dow Jones Industrial Average. More interesting, however, is the reason that made me post my forecast. Just in those moment, sentiment indicators showed that over 85% of market participants believed that the market will continue to collapse. At the same time the media headlines were striking:

US cuts interest rates amid fears of global financial collapse - Financial Times

In general, any normal person who had trusted his professor in the university, would say that the situation is truly tragic and indexes will surely continue to fall. Surely, but no. That is exactly the extreme emotional state of the crowd, that warns of a coming reversal. Take a look at the chart.

http://marketsinside.com/images/stor...jia_d_jpeg.jpg


Near bottoms, the psychology of the crowd has same features every time - almost 100% of people are pessimistic, the media headlines suggest that the Armageddon is just a day in front of us, and the idea that the markets could reverse looks pretty much as science fiction to everyone. And just then, the market turnes its direction. In other words, my "absurd" forecast turned out to be exactly correct.

http://marketsinside.com/images/stor...jia_130710.gif


Near the peaks, the same crowd that has went the other extreme - the crisis is over and it can not be repeated again, as economic indicators are as brand new, Japanese calculators work with full energy, nearly 100% of all people are optimistic and media which is pushing forward to a statement of the Minister of finance, who says that the crisis is forgotten. But you know what follows when the crowd reaches one of two extremes - in the next moment it flips and takes the opposite direction.

And as we observe these abstract chart with various lines and numbers on them, we explain what led to a decrease or increase the length of the lines, it is nice to remember something important. These lines actually represent the world's economical development. A long line down means that banks will not give you more loans, or that your private pension fund may disappear, or that your customers will disappear, that your business partners will start to cheat, you can have difficulties paying your mortgages, or that your wife will love you less. And nobody will be able to help you. Cause they will be in the same position.

Higher chart lines mean some good things with which we are used to. Optimism in the mass psychology takes much longer than pessimism. We all know how good we feel when we can use less efforts to live more comfortably.

I propose to be alert and worried that the chart lines will go lower. Unfortunately it is very likely

World's major stock market indexes has made some interesting surprises these weeks, and that was enough for some analysts to point out that the crisis is over and all the pessimistic forecasts are gone for good. It's true that there are some changes in the details, but I want to clarify - we're far away from changing the perspective. And because I use technical and Elliott wave analysis, I want to share my critical levels and to warn you not to trust those enthusiastic "I-wanna be-bullish" statements on the media. As we all know, mass psychology doesn't care about media.

http://marketsinside.com/images/stor..._120810_2h.jpg


Although the German DAX made a new high and all the related super optimistic headlines was thrown to the public, the perspective of the main German industry index is not very bright. While the market is below the critical level (6,393), we expect to see a market reversal which could be the beginning of a larger bear rally.

http://marketsinside.com/images/stor..._120810_6h.jpg

On the other hand, we haven't seen a new high in DJIA (Dow Jones Industrial Average), similar to the one DAX made. The market, actually is still far from its previous top at 11,267, which we set as critical level for all current bearish scenarios. The wave count that we use as a primary is a pattern called leading diagonal. If the market stays below the previous top, and breaks the bottom of wave i, most likely will confirm a sharp downside rally.

So, instead of talking enthusiastic without observing the markets, we've just set two major critical levels for DAX and DJIA, which will eliminate the bearish perspective for a while. That's it. While the markets are below those levels, we look for an appropriate place to short the market. The best thing to do is to have enough confirmations using your trading strategy.

Forecasting and trading on the financial markets are bad things to do if you don't have a systematic approach. It means that if your trading strategy allows you to have a guess one time out of ten, then you'd better do something else for a living. A working strategy requires successful forecasting in both directions - upward, and downside. This would allow you to stay tuned to the market, and take the most of the opportunities it offers.

Now, let's take a look at two charts of GOLD, taken from two different Metals Bulletins. The first one is from July 13:

http://marketsinside.com/images/stor..._130710_1h.jpg

"GOLD - Lower, for wave v.
We saw the new low that we expected for wave iii, and some sideways price action for wave iv. Although we can not be sure if wave iv is done, there are enough evidences to suspect that we're gonna see another low this week. Critical level at 1,230. Appropriate target at 1,157."

As you can see from the next chart below, we had our forecast right and the target was reached.


http://marketsinside.com/images/stor...110810_fin.jpg

Wave count could change, because of the new market structure, but the analysis was right. So, we saw the bottom we expected and moved on with the next perspective, from August 03:


http://marketsinside.com/images/stor..._030810_2h.jpg

"GOLD - Higher.
We expect the rally to continue til we see wave ii done. Critical level at 1,156. Appropriate target at 1,223."

And right now, if you take a look at the GOLD's chart, you'll see that the target was reached just a couple of hours ago. So we had our Elliott wave analysis for both directions - lower and higher price action. Even more, the market reached exactly the targets we set, again, chosen with the Elliott wave theory.

I still remember the early summer, when the dollar index was to levels around 88.00 and
the excitement was incredible. All the media and well-known analyst claimed that the bull market will not end soon and we're about to see more and more highs. Meanwhile, the sentiment indicators that I use, showed me that there were around 95% bulls at that time. Sentiments are not enough to forecast, but they are very useful to predict upcoming top or bottom on the market. So, I draw my wave count and I published marketsinside's Forex Bulletin on 6-th of June, where I wrote:

http://marketsinside.com/images/stor...s_060610_d.jpg


http://marketsinside.com/images/stor..._060610_1h.jpg

"US Dollar Index - Higher.
Still under the development of wave v of (i) or A. After we see a complete five waves, we can expect a short term reversal. The correction could be sharp and deep, so now is not the time to be bull."

Well, few days after the bulletin was published the market hit its high at 88.82 and reversed. Since the beginning of June til now we see a sharp and deep downside correction. Actually, it's much deeper that I expected. But guess what. Sentiment indicators are again showing some extreme levels of the investor's psychology and by that I am sure that the market will surprise a lot of people in the near future.

In times of near the edge of extreme optimism and buy now mania for precious metals, accompanied with the "deflationary crisis is behind our backs now" opinions, it's good to keep an eye on the most important commodity - Crude oil and its derivatives. We keep listening about the economy based on knowledge, especially from the European leaders. But you know, the truth is that the world economy is based on Oil. And honestly, I don't see how that's gonna change, not in the next few years. So we'll keep consuming oil like hell, worrying whether the price will rise or fall. Right now, especially after the 2008 dramatic fall, all eyes are held on tomorrow's FED announcement. Tension in the air. If the QE2 package is smaller than expected, the oil will slip back from the recent gaining, or vice versa. So they say. I'd like to pay your attention on another factor - mass psychology and the technical picture on short term Crude Oil market. Now, in this moment, I can really focus on two major Elliott wave outlooks on WTI Light Sweet Crude Oil:

http://marketsinside.com/images/stor...021110_d_1.jpg

If we can consider wave X to be done at 87.41, then that level is set as critical and we can expect a serious short term drop with appropriate target near 46.30. Some labels on the chart are not shown. That we can define as scenario 1.

http://marketsinside.com/images/stor...021110_d_2.jpg

Scenario 2 gives us perspective of another rally. The appropriate target for the top of wave X in case I would set near 106. That level is near key mass psychology resistance, because it represents the upper shoulder of the channel, and is also near the 1.618 Fibo level of the 2008 fall.

There is no primary scenario at this moment. I would say that both of them are equal from technical point of view. In either way, tomorrow's announcements will trigger one of them.