Analyzing the Yearly Candles of 2014 to Setup Trading Plans for 2015

Yesterday’s blog post already analyzed the yearly candle of the major currency pairs. It concluded that the USD strength trend was very clear when reviewing the open, high, low and close of 2014.

Here is a summary of the most important information when looking at (yearly) candles, which will also be relevant for today’s blog post when reviewing the EURAUD and GBPCAD:

  1. Candle body size (the difference between high and low). This provides information on how big a candle is. A small candle (relative for this pair) could indicate indecisiveness;
  2. Candle wicks on top AND bottom (the difference between low OR high – open or close, whichever is closer). The wicks show where buying or selling pressure had a strong impact on the candle.
  3. Candle close (difference of how far candle closes from high or low). This shows how strongly a candle closed away from the high or low. A candle close within 5% or 10% is extremely strong and indicates bull or bear control during the year.

More details about this type of analysis can also be found here.

EURAUD in 2015

Open of 2014 was 1.5474 and the high was 1.5831. The low was 1.3800 and the close was at 1.4817.

The candle was a 657 pip bearish candle (close – open) and was 2031 pips from high to low. It had a 357 pip wick on top (17.6%) and a 1017 pip on the bottom (50%).

When looking at the data, the EURAUD seems to have some mixed signals. It has a bearish candle but it also has the biggest wick at the bottom. But if I look closer to the facts, then the bears seem to be in a better position.

Reviewing the monthly chart shows that the EURAUD peaked in an uptrend in January 2014, then retraced deeply at 1.38, rallied back up to 1.53 and then faced exhaustion with its monthly candle in December 2014 (wick on top of last month – purple circle).

Conclusion: although the EURAUD is less clear than most of the USD pairs, the bearish candle weighs in stronger than the bullish wick for the moment and the pair looks (more) bearish. Key levels are last month’s high and low: a break of the low is a confirmation whereas a break of the high is an invalidation of the bearish trend.

6- 1- 2015 ea

GBPCAD in 2015

Open of 2014 was 1.7629 and the low was 1.7355. The high was 1.8669 and the close was at 1.8096.

The candle was a 467 pip bullish candle and was 1314 pips from high to low. It had a 573 pip wick on top (43.6%) and a 274 pip on the bottom (20.9%).

Despite the GBPCAD having a bullish candle in 2014, the characteristics of the candle look more indecisive. The rather small size of the yearly candle (1300 pips) is the first clue. Especially GBP pairs typically have bigger sized candles. Also, the pretty big wick on top and on the bottom of the candle indicates that no side has any real control.

Conclusion: indecisiveness is the dominating factor for this pair. And that is normal. You will not be able to make strong conclusions on all pairs. GBPCAD is not in a strong trending position at the moment. That could change though if the GBPCAD is able to break above or below the consolidation chart pattern (triangle) but for the moment the odds of the consolidation going sideways (purple arrows) seem highest.

6- 1- 2015 gc

This analysis can be done on all currency pairs, of course. Do you have a particular currency pair in mind that you would like to have reviewed?

What currency pair did you find most interesting?

Will you use the information from the yearly candle or do you trade on smaller time frames?

Let us know down below!

Thank you for sharing this blog post and wish you all Happy Hunting!

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