The Lawrence Chan Blog

A very short video shows us how much the world has changed.

I guess it is time to look beyond US and the rest of Western countries when you look for trading opportunities. The easiest way to do so, of course, is to check out forex and index futures around the world to participate in the rise and fall of the countries.

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First, we’ve received quite a number of emails telling us that when they sign up, the message "the emal address you are using is already taken" pops up. It turns out that it will happen to certain combinations of browser and websites you have visited before going through the sign up process. Hence I have put a message there telling everyone to ignore the message for now.

Second, we’ve been spammed by bots auto sign up to our site 7/24 for a few days now. As far as I know, I do not know that many famous actresses personally and I am quite sure many of them are not interested in trading. We are now forced to use a captcha code on the sign up page. Hopefully majority of the bots will leave our site alone.

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I posted about gold back in mid Sep. Time to review what happened since.

The inability of gold holding 1320 points to a drop to the next target zone below.

How do we tell where a target zone is?

The area highlighted by the red rectangle is a chart pattern called pocket. It has a high probability to be tagged again no matter how far the price has moved away. It works very well across all major markets.

It is as simple as that.

To learn more about the pattern and other chart reading techniques you can check out my online ebook Art of Chart Reading

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Nikkei weekly chart below.

Those who are familiar with market profile would notice at once we have 2 areas of concentrated volume:

1. 14000 to 15500 from years ago and then the past few months

2. 9000 to 11000 from end of year 2008 to right before the melt up actions

The void between is likely to be backfilled once the upper extreme is rejected which was done earlier this year at my STOPD Level of 200% of year 2009 range.

Next is the daily chart.

The retest of the lower high from July back in end of September was a low risk short zone as 150% expansion level failed to hold up the pullback from the July swing top which often points to the necessity to at least retest of the 150% expansion level once more. Those who read my ebook Art of Chart Reading can tell that the falling wedge and 3 pushes down patterns are asking for a retest of that swing low made in August.

Both support trend line and the original resistance trend line are sitting right underneath the current price level making it a even strong support zone.

Last one is the hourly chart.

Notice the 150% line is not positioned exactly to where it should be as I switch between resolutions in MetaTrader.  It somehow moved the drawing object and the price level is off a little.

Here is where the short play becomes tricky. Notice that there is a gap down below 13400 area while a pocket above at 13600 lines up with the 150% zone and the 2 trend lines I have draw on the daily chart.

For the short side to get a home run down to the 100% expansion level, Nikkei has to stay weak and close below 14300 on daily close basis. That is the natural stop area right above the last swing high on the chart. You need trapped longs to fuel powerful sell offs. Nikkei also has to flush through the current support zone right below quickly or the sell power will be absorbed.

Late shorts will have a difficult time to hang onto their short positions if they initiate their shorts now on a panic after 2 weeks of selling. Not that many people short with a wide stop of 500 points or more. I am not saying that it will not workout. I am saying the price movement may not be directional as most short sellers would hope for.

The downside targets of current year midpoint at 13170 is still in play. so is the 100% expansion level all the way down below 11400.

The tricky question is how to engage it if you are not well positioned yet.

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