Chart Patterns - Engulfing Pattern

Type: Reversal Pattern

Appearance: The engulfing pattern is a major reversal signal composed of two candles with opposite color bodies. From now on, we are going to consider "white candles" to be up and "black candles" to be down. A Bullish Engulfing Pattern happens in a down-trend and consists of a white candle whose body fully engulfs the body of the previous down-candle. A Bearish Engulfing Pattern is the exact opposite: It happens in an up-trend and consists of a down-candle whose body fully engulfs the body of the previous up-candle.

Typical Duration: 2 candles

Description: The reasoning behind the Engulfing Pattern is fairly easy. The bulls (or bears) are running out of steam throughout the primary candle, and the opposite side of the market makes a powerful move throughout the second candle. There are 3 main criteria that have to be met so as for a pattern to be thought of as an acceptable Engulfing Pattern.

1. The market must be in a clearly defined trend before the emergence of the pattern.
2. The body of the second candle should fully engulf the body of the primary candle. It doesn't need to engulf the previous candle's shadows.
3. The primary candle should be in the direction of the trend, and the second "engulfing" candle must be in the opposite direction. That is, in an up-trend, the first candle must close higher than it opened, and the second candle must close lower than it opened, and vice verse in a down-trend.

In addition to those necessary criteria, there are two other criteria which may improve the Engulfing Pattern's performance.

• The larger the difference between the body sizes of the two candles, the more likely it is that the pattern is a vital reversal point.
• Seeing the engulfing pattern after a long trend as opposed to a quick burst increases the probabilities that all the forces pushing the trend have indeed been exhausted, and that the trend is prepared to reverse or retrace.

Strengths: The engulfing pattern is one of the most reliable reversal patterns available, particularly when the extra criteria are applied.

Weaknesses: Having said all that regarding the pattern's strengths though, it usually doesn't lead to an actual reversal of the trend, however will usually lead to a consolidation or a retrace instead. The buying/selling pressure that causes the engulfing candle may come spontaneous events like large non-speculative flows, or profit taking close to a major support or resistance level.

How to Trade It: Simply wait for the engulfing candle to close, make sure that it does actually form an Engulfing Pattern according to our criteria above, and enter the trade accordingly. Stop losses are often placed simply beyond the top of the formation for Bearish Engulfing Patterns, or just below the bottom of the formation for Bullish Engulfing Patterns. Engulfing Patterns in general don't have any inherent take profit level. Take profit orders are supposed to be placed according to results of other analysis.

Posted on Wednesday, 29th of February, 2012.

How to Invest ?

A growing range of methods currently permits investors to either buy gold, or just gain exposure to gold price movements. From gold coins, online accounts, exchange traded funds and sophisticated financial products, to mining stocks, the most acceptable gold investments will rely on the investor’s specific needs and outlook.

The distinction isn't always clear between the acquisition of physical gold and different investments that provide an exposure to movements in gold price. This is particularly so as it has long been possible to invest in bullion while not really taking physical delivery.

If you're thinking about an investment in gold, it is vital to appraise yourself of the most effective options for your specific needs. The following questions are designed to assist you choose on the channel or channels of gold investment that are most acceptable for you.

• Why did you choose to buy gold?
• Do you want a real asset that is physically accessible at all times or do you simply want exposure to the gold price?
• Will you want the gold delivered to you or would you prefer it to be stored in a vault?
• Do you have information concerning all the costs that may be involved? These include: taxes, commissions, premiums, storage and insurance.
• Is the counterparty (i.e. the person or company from or through whom you'll be making the purchase) reliable and trustworthy?
• How does gold fit in along with your different investments?

Take a look on the investments basics by AM Financials.

Posted on: Monday, 27 February, 2012.

EUR/USD التحليل اليومي

يوم سعيد

الاثنين، 27 شباط/فبراير، 2012 ؛ 06.14  توقيت غرينيتش؛ حاليا: 1.3441

في الواقع ضرب ارتفاع يوم الجمعة المقاومة الموجودة بالقرب من مستوى 1.3485 حيث بدأت مرحلة التوطيد حاليا. الصورة الفنية على المدى القصير لا تزال تبدو في ارتفاع  نوعا ما، مع مطالب لتصحيح انخفاضي أكبر (على سبيل المثال نحو محيط 1،3300-1،3250 تقريبا) أو أن تستغرق مرحلة التوطيد وقتا طويلا. رغم ذلك، من وجهة نظر تصرف موجة سعر نفضل فعلا ارتفاع نهائي آخر إلى 1،3515-1،3540 قبل العودة (مؤقتا) مرة أخرى نحو 1،33-1،3250. من أجل الحفاظ على فرصة ارتفاع صالحة وشاملة اليوم يجب ان يحترم السعر مثاليا مستوى 1.3410 (على الرغم من أننا نرى دعما بديلا فقط بالقرب من 1.3370).

مع أطيب التحيات

The Role of Behavioral Science in Stock Market Investing

The stock market is driven by human psychology. Fear motivates individuals to sell in a panic, so they usually sell low when stock prices fall. Hope, or greed if you prefer, also drives the markets.

That is why individuals see a rising stock and invest, although its price may be overly valued.  Behavior in investing is seldom rational.  Buy low sell high is a simple rule, however only robots might follow effectively, and not human beings.  Individuals behave according to wish, need, fear, herd mentality, and simply plain ignorance too.

Motivation is everything when it involves driving the market, and one of the primary causes of the economic downturn, is that individuals additionally develop a herd mentality. They see a bubble building, however cannot determine that each bubble must burst.

It happens repeatedly.  Of course other behavioral factors have an effect on the market also. When rich people are insulated from the real world, they forget, or never knew, that people out there have many obstacles to earn enough money for housing loans. Bundles and swap deals leave individuals who can’t really afford loans to be lured into them anyway. Lending on easy credit almost always results in a catastrophe because those brokers making the deals are profiting and seeing no end in sight.

Savvy investors understand that each bubble must burst. They know that you need to buy and hold, and only invest as much as you can afford to lose. They know that in the long run, stocks can rise and fall and very solid companies stand the test of time.  If they're in a scenario to do so, smart investors pre-place orders to buy on dips, and sell on 52 week highs.  Over time the portfolio grows, albeit modestly, however steadily.
Of course this is not a tough and quick rule.  Some huge corporations with record profits can still die off eventually.  Consider large oil corporations.  Eventually we are going to run out of fossil fuels; however the smart energy companies are switching over to slowly invest into renewable energy.  You don’t have to lose sleep regarding the most profitable companies on earth being seemingly to lose billions.  Even B.P., made record profits in spite of the disastrous oil spill in the U.S. gulf.

Speaking of oil soaked birds and marine animals, another behavioral aspect of the stock market involves the fact that individuals will typically invest in something they support, and/or shun those investments that they feel do harm in the world.  Thus behaviorally, people can either believe some stocks are “good” and some are “evil.”  Of course, there's continually the case of these who persuade themselves that even betting, cigarettes, oil, and toxins are good investments because they have reasoned out what good is done in the world with these things!

People aren't known for their reasoning and rationality when it involves the world of investing, however overall the majority who reign in their fears and hopes, and if they keep aware of these drives, can act upon them and gain.

Posted on Wednesday, 22 February, 2012.

EUR/USD التحليل اليومي

يوم سعيد

الاربعاء، 22 شباط/فبراير، 2012 ؛ 06.00  توقيت غرينيتش؛ حاليا: 1.3237

بدلا من رؤية المزيد من المكاسب، اننا نواجه تداول جانبي حيادي ضيق (الذي حتى الآن هو على مستوى أعلى بكثير من الدعم المذكور عند مستوى 1.3185). ما زلنا نفضل فكرة ازدياد الارتفاع على المدى القريب (بدلا من مرحلة التصحيح لفترات طويلة من أعلى مستوى 9 فبراير) على الرغم من أننا ما زلنا نفقد كسر واضح لمستوى1.3250  خط المقاومة للإغلاق اليومي . من أجل أن نرى مستوى أعلى خلال هذا الأسبوع يجب أن نحترم اليوم محيط مستوى 1.3185 – 1.3175 (الذي سوف يفضل ألا يوضع تحت الاختبار)، وعاجلا أو آجلا كسر واضح لمستوى 1.3275  الذي من شأنه أن يزيد بشدة من احتمالات الارتفاع نحو مستوى 1.3345  التي تعتبر بالمقاومة المؤقتة في الطريق إلى الوصول نحو المنطقة المستهدفة حول 1.3450 – 1.3500.

مع أطيب التحيات