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Technical Analysis Principle

On a global scale, anytime, anywhere, including all available information and news, the overall community of the persons intervening, directly and indirectly, into the financial markets, by their decisions to buy or sell, consciously and unconsciously, are influencing the prices: the anticipations behind their decisions are a kind of prediction that can be captured by mathematic formulas called technical indicators. The skill consists then in being able to parameterize those indicators and more importantly the art consists in being able to interpret them.

Since 1991 I have been spending about 12,000 to 13,000 hours of using, learning, testing, parameterizing and interpreting tens of technical indicators observed on 5 different time scales (daily, weekly, monthly, quarterly and yearly charts). Those indicators are named Moving Average, MACD, Aroon Indicator, Bollinger bands, Momentum, Parabolic SAR, Ichimoku Kinko, RSI, Directional Movement Index, Buying Pressure, Selling Pressure, Relative Strength Index, Variation, Fast Stochastics, Slow Stochastics, Oscillators, ... plus guiding lines studies such as Fibonacci Retracement Lines, Fibonacci Projection Lines, Gann Lines, Gann Fan, Andrews Pitchfork, Regression Lines +/-2SD, Trend Channel Lines, Trend Lines, Pivot Lines ... Scales are daily, weekly, monthly, quarterly and yearly charts.

After 20 years of experience, I have spent enough time to testify that technical analysis is one of most efficient, sustainable and performing decisional tool.

Amazingly, the use of long term technical indicators can show new major emerging trends well before arguments appear in the mainstream media (for instance the secular top of Euro in 2008). Interestingly, in order to match technical signals with economic explanations, technical analysis can provide an efficient support to learn fundamental analysis in parallel of technical prognosis (for instance discovering the reasons of the secular bottom of gold in 2001 parallel to the dollar secular top). Computer is run by the EIKON product from REUTERS THOMSON. Such a sophisticated program is needed in order to oversee 26 indicators upon 5 different time scales.

Some of my past forecasts

1991: I joined a small private bank and began as a currency trader. I discovered the technical analysis and became immediately fascinated. I spent many hours a day to explore the Reuters machine, to parameterize the indicators and to use them.Time horizon was intraday view; indicators are set on 5 minutes, 10 minutes, 30 minutes, 1 hour, 2 hours and 4 hours charts.

1996: I joined the wealth management department of a big private bank and I adapted the parameterization of technical indicators to longer periods (daily, weekly, monthly, quarterly and yearly charts).

1998: I started financial forecasts as SMI was first to post secular top, 2-3 years before other markets because Swiss Index was not made of technological bubbling components.I started learning fundamental analysis.

1999:late in the year I felt anxious as I had first indications of secular topping pattern and I put all my money into a house.

2000: I observed the techno bubble busting and forecasted all markets topping by the end of 2001. I set the beginning of the 10-20 years Winter Kondratieff cycle and the global rebalancing in favor of real assets.

2001: I discovered the secular commodity bull market. I put the US dollar on sell at 1.80 against Swiss franc and set parity by the end of decay. I put oil, gold, Australian dollar and Canadian dollar on strong buy for long term.

2003: after 2 years of studying economic cycles, I understood what was going to happen and put gold at $1000 by the end of decay, as appetizer, and rated it as core holding investment.

2003: my technical indicators reported a major bottom on markets, opening another rise for some years.

2005: I rated silver as the lifetime investment opportunity. I put both gold and silver as core investment and set gold price at $3500, silver at $200, at the end of secular top, around 2015.

2005: US Philadelphia Housing Index posted a secular top, waked up my mind.

March 2006: I typed words “global systemic crisis” in Google search engine and subscribe to GEAB letter, one of rare contributors that anticipated correctly the subprime crisis.

November 2006: some big banks posted a major top on my indicators. I was convinced of a huge coming crisis and lasting for years. I was quite alone with my thoughts so I spent time to read commentaries from Marc Faber, Peter Schiff, Nouriel Roubini, Jim Puplava, Bill Bonner, GEAB … in order to share same perspectives.

April 2007: strangely once again the SMI was first market to give the major topping signal on my indicators, to be followed by European and US markets during summer and autumn. I felt still rather alone with my negative views.

December 2007: I set a crash alert from Xmas or New Year’s Day. It came in January and SocGen was caught with Kerviel’s affair. Stock markets tumbled -18% between January 2nd and January 22nd. Euro made a secular top against Swiss franc late in the year with long term projection price of 1.09.

Early 2008: Russia, Mexico, Brazil markets posted major tops. Indicators gave a secular top on Euro against US dollar. I set a major warning on a European crisis to come soon and projected EUR/USD at parity by 2015.

July 2008: Fannie Mae & Freddie Mac were collapsing. I held 80% of my money in gold and silver. I couldn’t believe my indicators showing me that gold was about to correct down and that US dollar was about to rise but it happened through the summer.

Late 2008: I forecasted a major market reversal for April 2009. It came earlier in March. I saw then a24 months of rising markets at least.

Late 2009: I set 2012-2015 as the mother-of-all-crisis time zone.

Early 2010: I decided to launch www.chartguidance.com in order to guide investors in that 2012-2015 major crisis.

Summer 2011: Volatility started to rise again, on the way to new high by 2016. It will remain much higher than normal. Cycles got shorter as summer top was detected with only 1-2 month(s) anticipation. US dollar set a major bottom against Swiss Franc and Euro during the first week of August.

Late 2011: I firmly set the forecast of a lifetime systemic crisis between 2012 and 2016 with a probability of 99%. The impacts of the financial aspects will significantly exceed those of the previous Subprime crisis.

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