How did we know that EURUSD would go to 1.40 ?


Those who have been following me on my twitter feed would have noticed that 3 weeks back, i had specified that EURUSD would be in an uptrend and this would continue till atleast 1.40 (this was when it was at 1.33). So, how did i conclude on the uptrend, in the first place, and how did i come to the conclusion that it would go on till 1.40 ?

Attached is the weekly chart and the daily chart of EURUSD. Here we notice an important pattern that is called ‘cup and handle’. This is a very rare formation and an ideal cup & handle would have to be preceded by an uptrend , for a bullish cup and handle and a downtrend for it to be bearish (a bearish cup and handle would be upside down). But in our case, we see a downtrend till feb 2009 (in the daily chart), followed by consolidation, then again a downtrend from April to June and an uptrend from June to beg of August (this forms the cup). Then we see a small downtrend from beg of Aug 2010 to end of Aug 2010 and then an upmove from Sep beg to mid of Sep (which forms the handle).

This is not a perfect cup-and-handle as it is preceded by a downtrend rather than an uptrend but this is ok in most cases. Also, the handle would usually go down to either 50% or 61.8% or 78.2% of the cup. In our case, it went down to 50%.

Then, in the third week of Sep, we see a break of the top of the cup (line with 0.0) which is the big indicator that the upmove is about to begin. care should be taken to wait till we see that the cup is broken and not assume that the top of the cup would be broken. I have seen man instances when the top of the cup never broke and it went down again.

So, we wait for the top of the cup to be broken and then, we see that over the next 2 days, we see a retracement which comes back to the top of the cup which is a retracement to the broken resistance turned support. This stage is very very important. we need to wait and see whether this retracement back into the broken resistance does hold or whether we fall back into the resistance region. If the resistance turned support does not act as support during the retracement, then it is a signal that the resistance break was a false break, which happens many times and hence we need to be very very careful with this.

In our case, the resistance turned support holds and we moved back up again. This is a clear indication that we are going up and we enter all our longs now.

Now that the uptrend is confirmed, how do we estimate the target as 1.40 ? I will explain this in my next article.

Do follow me on twitter (http://twitter.com/ns_karthik ) where i post some of my trades in real time.

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  • Vickyc

    I did clarify to you. and he took my comment off again. It is up to him, ask him why he scared of the facts and the truth. take a look at his posts on FF

  • it wasnt hindsight…as said in the article, i called it on twitter when the move started..i couldnt explain it in twitter…hence i have explained it now in the article..

  • Pablo

    So easy after the fact, everything in trading is easy in hindsight

  • well, i was the one who wrote the article…not sure why u r trying to bite Casey for it…if you feel that this article is wrong in some way, let me know how it is wrong…btw, i am not in the trading room and so there is no way u can know whether i am good or bad…not sure how this article of mine relates to some other article written a mnth ago by another trader !!

  • well, i was the one who wrote the article…not sure why u r trying to bite Casey for it…if you feel that this article is wrong in some way, let me know how it is wrong…btw, i am not in the trading room and so there is no way u can know whether i am good or bad…not sure how this article of mine relates to some other article written a mnth ago by another trader !!

  • AV

    Thanks for replying…I wish you were not talking so cryptic….have you used the premium service? Is one of the people running the rooms who you are talking about? I just would say beware of following someone who is NEVER wrong…they do not exist in trading….everyone is wrong in trading at some point. All of the moderators in the premium service are brilliant and they have a great success rate but they admit they are wrong on occasion….which is good as it teaches us that there is no perfect trader out there. The best thing is they teach you how to reverse losses…which is something you will not get in many services. I have turned horrible days into good days because of the premium service.

    I actually do think you were harsh and rude…maybe your choice of words was not what you meant them to be…I know on forums we cannot hear how you are saying your words…we can only read them and interpret your message through reading (and not annunciation or body language)….so maybe you just need to be more careful in that respect. I think you could have said your message without coming across harsh….maybe you just need to watch what words you choose? I have seen this happen on other forums.

    If you are dealing with a person who is NEVER wrong (according to your experience), then why are you bothering reading other people’s articles? If I had found someone that accurate I would just be doing what they say and not looking anywhere else…I mean, heck, if you found that then that is the holy grail of forex trading as far as I am concerned and you should just focus on their words and no one else. I mean, why waste your own time reading what others think when you have found someone who is so accurate already. That would be a great trading plan….I think most traders would be envious of having found that because trading would not take up much of their time and they would be successful all the time. But back to reality….your posts hint at a level of frustration you are having so I wonder where that frustration is coming from? Just relax…if you are following someone so successful then you should be raking in the big bucks and I do not know anyone having a good day on forex that comes across hostile….usually they are overjoyed and enjoying life and very positive and do not have a negative bone in their body…I guess following someone who is never wrong would give you this euphoria…so why are you so negative about this article?

    Also, I think in any forum the moderator has the right to remove defamatory comments…I know the person who is moderating this (through trading) and I know they are fair and just and would not just block you to look good….the people at Winners Edge want to see success and they are very open to debate (and they are incredibly honest and caring) so I know they would not block someone unless they were using obscenities. At Winners Edge they have nothing to hide…they are brilliant I think and live up to their word with what they do.

    I am not sure what else to say to you because I do not understand your harshness and your cryptic post. Maybe you can clarify? I just want to see ALL traders successful (including you) because I know forex trading is a hard world but it can be conquered and I know the team at Winners Edge will show you how to do it.

  • Vickyc

    Thanks Cantal, yes i want him to show my original reply. I know what I wrote.

  • Chantal

    “We are wrong all the time”

    That’s right Casey, you are wrong all the time that’s exactly the point made. Therefore some people use your signals the opposite way and are probably very profitable
    (95% of the time).

  • Chantal

    There was no obscene language in the comment, just show the original comment of Vicky so everybody can see it.

  • Chantal

    I have read the comment before you flagged it, there was no obscene language in it.

  • Vickyc

    Thanks AV for your reply to my comment, and I really appreciate what you wrote, we all as traders have our own view and analysis about the currency movement and we are not 100% correct. I was never rude or harsh here, i made a comment about his post which he did not say the truth and I am entitled to write my view, I was rude when he blocked me from writing so he can look good. AV my success ratio has improved 3 month ago, when it was explained to me how to really analyze the the market, the signal service they talking about here ( no mention names ) has educated us in learning and anticipation how the market move and what to look for, and the teacher their has no Ego as somewhere else, since I joined them with some of my friends, we have been very successful traders and when he is wrong he says I am wrong ( i have not seen him wrong ), I have been trading for 4yrs and I have not seen someone could predict the accurate next move like him, as an example, When everyone was short in the Aussie he was the only one long to .9732, when everyone was short on the Eur, he was the only one long from 1.2680, when all wee short on GBP he was the the only one long from 1.5330, we have learnt a lot from him, But to read here , How did we know that EURUSD would go to 1.40 ? they did not, it is just false and not true statement, then after I wrote my comment, he blocked me. He must apologize to me personally and do it again or I will not stop and he learn and get his facts together.

  • thanks mate !!

  • Thanks AV I appreciate the feedback. I was getting a little nervous there for a minute it seemed as if I was out numbered 🙂

    But honestly I do enjoy trading and writing this blog. The people I have met over the last few years has been fantastic.

    Casey

  • Some of us saw this pattern coming before it even finished forming:

    RT @fxretracer @RemixTrades this link :http://beta.chart.ly/ettsmcq $EURUSD H&STue Aug 10 2010 00:14:21 (Mountain Daylight Time) via StockTwits Desktop in reply to fxretracerRetweeted by you

    But what ever you call it…the author of this post does a great job of explaining his thought process and explaining how to trade the pattern very well.
    Thanks!

  • AV

    No need to be rude Vickyc! If you really are a trader you would know that it is impossible to be correct 100% of the time…NO ONE is correct 100% of the time. Now you can follow your own charts and make your own decisions…but on any given day a currency pair can go any way it wants. As for the call for the Euro going bullish or bearish…well the QEII announcement caused a lot of movement upwards whereas without this announcement it may have continued to drop…afterall the euro is not a strong currency by any means (in my opinion…and most others would prob agree). But seriously, there is no need to be so harsh and so [email protected] towards someone else’s analysis (where they backed up their analysis with technicals and did not just make some random bs call like on other sites)…it seems like you are blindly using their calls as your trading method and not incorporating your own chart analysis along with them…..you need to own your trades and make your own decisions…not blindly follow someone else. Stop being so rude and do not put others down….remember the concept of karma?! Also, I find most traders who are losing money are rude to others…so maybe take a break from trading and analyse your methods to see where you can improve your trading skills. Don’t take it out on others if you are losing! Also, as an aside, I am a member of the premium room and I can tell you it changed my trading and my success rate is huge compared to before I joined this room. Maybe you should join and try them out before discounting them. Peace to you and I hope your trading is successful…but please keep your anger away as we do not want it here…we just want a productive forum.

  • Some of us saw this pattern coming before it even finished forming, but what ever you call it…the author of this post does a great job of explaining his thought process and explaining how to trade the pattern very well.
    Thanks!

  • can we stop this pls….the bearish analysis was done by one analyst and this bullish analysis has been done by me…each of us have their own reason for doing so…ultimately, one of us has to be right …we are not hiding it and we will not do it cos we, as traders, have been wrong 100s of time…thats why i said, dont follow us blindly…do ur own cross-checking before you take the trade…we are here just to guide you…these articles are not signal services…

  • Vickyc

    You just got up from your sleep, what obscene language did I use, oh because i said you was wrong and lied, thats obscene, you can block me as much as you can, I will find a way to write about you.

  • Feroli,

    Thanks for you comment, Like I mentioned with Jay earlier go ahead and take the opposite of us and you might to just fine 🙂

  • Jay, it is because Vicky uses obscene language that is not permitted on this site. We are traders we make trades that are not profitable all the time. If you are a trader at all you do the same thing.

    We encourage disagreement, just not putting people down and bad language.

    Thanks for your participation and if you want to trade opposite of us that might just work. Any trade strategy will work with proper money and trade management.

  • Chantal it is because Vicky uses obscene language that is not permitted on this site. We are traders we make trades that are not profitable all the time. If you are a trader at all you do the same thing.

    We encourage disagreement, just not putting people down and bad language.

  • The reason you are blocked vicky is not because you say we are wrong it is because of obscene language it is not permitted on this website. We are wrong all the time and we admit it. That is because we are traders and traders cant be right all the time. But we have learned the art of trading and we are trying to share that with you.

  • Vickyc

    Yes, and that is why they have to learn to admit their mistakes instead of hiding it, and now he blocked me again, its ok, keep doing it, I have no problem

  • Feroli K

    What these people do is to give a lot of attention to their winning trades. The losers are substantial but they are ignored and nobody hears about them again. They all do that.

  • Vickyc

    Yes, and they have been doing that along every day, they always make calls in the wrong direction

  • Jay Roberts

    They went short and at that moment this pair made the biggest move up EVER, 1500 pips within 4 weeks. It would be a nice strategy to do the opposite what they do.

  • Vickyc

    Why you blocked me , because I am right, how professional you are.

  • Vickyc

    You know why, because he want to look good, as they all do, and now he blocked me so i can not write and comment on his shitty lies

  • Chantal

    Why is the comment from VickyC flagged for review, she was absolutely right.
    You shorted Eur/Usd at 1.26 right on the low and you published it here.

  • Vickyc

    I really see and understand that there are different analysts writing their view in here, but you as professional trader must get your facts together, you can not be posting what is not true, or may be you trying to show off here, Casey and his analyst were never long on Eur/ or knew it is going to 1.40 like his statement, him an his analyst made so many wrong calls and they change it or deleted from FF, when you wrong you wrong and when you right you right, no one wrong or right all the time, but to write something like that, it just prove how your intention are, and you really don’t know what you talking about.

  • vicky, u need to see and understand that there are different analysts writing their view in here…all the articles are not written by Casey…so spare the brickbats…u can check the author name below the name of the article….

    also, the analysts present their point of view…it may turn out to be right or wrong…as a trader, it is your responsibility to do your own analysis and cross-check to see if you are comfortable with that view…by doing this, you will also come to develop trust with some analysts….

  • also, below is the link for its definition…pure cup & handle (bullish) is preceded by an uptrend, which is not true in our case…i have mentioned that in my article that this is not pure cup & handle but nowdays traders/experts accept a preceding downtrend before a bullish cup&handle as being valid…

    http://www.investopedia.com/terms/c/cupandhandle.asp

    btw, this is how u present ur views…not the way u have done it…even if u r the greatest trader in the world..

  • Vickyc

    Casey you are one of a kind, you never right any way, look at your post http://winnersedgetrading.com/eurusd-technical-analysis-4/

    I am just wondering, do you realy know what you talking about.

  • it could be dragged down in a bit of retracement which is due in EU and GU as well…but i really dont see it going down till 0.92 in the near term…

  • well, Fred…a little more explanation would be helpful rather than mouthing obscenities… if ur intent is to start an argument rather than a healthy discussion, then i guess you should know that mouthing obscenities is the easiest thing to do for anyone/everyone..

  • Fred

    this is not a cup and handle, bullshit !

  • Jlwk78

    Hi Karthik. You are good. All your articles very interesting. How do you suggest that I can improve in my FX technical analysis? By the way what is your view on AUDUSD? Any chance of it going down to 0.92 or even 0.9 in the near term?

  • nice to know that u r from chennai…r u a full time trader ?

  • iman

    Hi,
    But today we have to wait for breaking the 1.2900 for more down trend toward 1.2835 as it shows in the market.
    Is it possible?
    Thanks

  • Kumarang

    really ur article was amazeing sir, i also from chennai, i like to improve my tradeing sir, u can help me sir