Wednesday, April 6, 2011

4/6 Top Prospects (bulldog edition)

Gold (GLD) broke above the 55-day price channel into bull phase, as did two forex pairs: EUR/CHF and EUR/USD.

The EUR/USD pair's new, convincing breakout above channel can be treated as continuation of a trend that began March 2, but it can also be analyzed as having hit a trailing stop/loss, set at double the average true range.

For purposes of trading now, I'm coding EUR/USD as a new breakout.

I'll update Top Prospects later today with results of my chart scan.

sym phase adx bday blevel stop atr atr%
EUR/CHF   16 apr6 SF1.32033 SF1.30863 0.0117 0.9%
EUR/USD     apr6 $1.36605 $1.35435 0.0124 0.9%
GLD*   17 apr5 $141.28 $139.72 1.54 1.1%

  • phase: Green for a bull-phase breakout, red for a bear phase.
  • adx: Average direction index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 30 and up but below 40, magenta (light purple) for 20 and up but below 30, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, purple for sunset on the horizon and brown for the earth.)
  • bday: Breakout day, the day the price broke through the upper or lower 55-day price line.
  • blevel: Breakout level, the price level of the line that was broken through.
  • bstop: The stop/loss price calculated on breakout days as the 14-day average true range below the breakout-day low for a bull phase and above thre breakout-day high for a bear phase.
  • atr: The 14-day average true range, in the same currency as the price.
  • atr%: The average true range as a percentage of the breakout level, an indicator of volatility that is comparable for all potential trades.

About channel analysis

Read a detailed explanation of my channel analysis method, including trading rules.

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