Friday, 30 July 2010
Gold continued +EurGbp- price failure at CL due to RL resistance
Gold still edging higher but what will happen when it meets/touches the up -sloping RL this afternoon which can be seen in dark red rising from the bottom LHS. If you look back at price action at these lines there is always more volatility and often price drops straight through ( see previous Gold postings from this week)
Thursday, 29 July 2010
Gold--going sharply lower continued
Price seems to be trading a weak range and as yet unable to get above $1170. and the green ML which is a rough/approx Fib 38.3% RT...expect to see a definitive movement soon..possibly Friday but i will try to do a reaction line reverse count and get a more exact date and post it AM Friday.
Gold--going sharply lower over the coming days/weeks?
On the 21st July i posted crunch time for precious metals
Now it looks as though we will see price make a retracement of upto 50% maybe to 1175 area after the recent 25 $ fall before we head lower slowly towards the CL of the downsloping ML set ( not shown here) using obvious pivots (1265 on 21 June/1044 feb 5/1226 3 dec). Objective about $1080.00
Wednesday, 28 July 2010
RULES FOR REACTION LINE SETUP- Part 1of 6
OK, for several weeks, even months i have been saying that i would publish rules for my reaction line setups and charts and will now endeavor to put into words the way i setup my charts and then how i actually make a trade entry. Firstly i am using a Median line/Pitchfork indicator tool that automatically draws reaction lines and warning lines if required. The RL's can be extended as rays from the upper and lower median line parallel and you can choose the colour and style. This indicator is available on demand free from my email mediantrader@aol.com but is only available for Metatrader4 as a MQ4 file. Ensign Windows does draw RL's but not warning lines as such.
E-Signal does nothing(!- it will draw WL's but it is a cumbersome tool) and all RL's have to be calculated and entered manually as separate line segments.
1. The first thing i do is to appraise the chart in a high time frame and look for what i call a 'controlling swing'. This is what John Crane would call a Reaction Swing (there the similarity ends). It is in effect a correction/retracement against the prevailing market direction and the more substantial the better. For this blog i am going to use spot gold chart as an example. Firstly to keep things simple here is a recent e-signal spot gold 240 min chart.
For the moment forget all the other forks drawn except the RED coloured fork/ML set. This was a sharp retracement against the prevailing trend back in May onwards). This i chose as the controlling swing. Why do i call it that? Because as you will see price action is still being controlled within its RL's and warning lines many months on. There is always some debate about what pivots to use and my advice is that you should use pivots that abide by Dr Andrews rules even if price is not fully contained within the fork and price has exceeded (sometimes alarmingly so) the upper and lower MLP's. Then using your Metatrader tool set the fork to show extended ray RL's and warning lines. Choose colour and style to suit.
Above is the controlling swing seen in the green fork in a 60 minute chart TF with its reaction and warning lines in dark red- the latter dashed dark red. You can see the pivots used are classic P0,P1 & P2 and that price leaves the fork after some time and no clear interaction between the warning lines can be seen....don't worry. You can play about with different pivots depending on the results and it is not unusual for me to use two ML's in the same controlling swing if both give good results. More about this later but i would say that the more you add ML's the more cluttered your chart becomes and it will be unusable in high time frames due to the lattice of RL's & warning lines.-No worries.
Once you have drawn your controlling swing ML with it's extended RL's and warning lines you should add any important long and medium term forks with just RL's (not extended and no warning lines). Then you end up with a lattice of hexagonal squares that resemble Pyrapoint or
Gann grids etc.
The next thing you do is drop down to 15 or 30 min TF and your results should be similar to above. Price action walks up and down and seems bound by the shackles of your reaction and warning lines and provide support and resistance as price oscillates. There are several points that should be borne in mind. The resolution, accuracy and quality in high TF's is usually lost but is proportionate to the TF you originally draw your controlling swing in. ie if you are drawing on daily charts then you should see results in 60min charts but if you draw you controlling fork in a 60 min chart then you should go down to a 5,10,15 mins TF. For accuracy i suggest you draw in 60 or 240min and view results/trade in 10, 15 or 30 min charts. Remember even a small error in P1 P2 is serious and a tiny error in P0 is a disaster as you will see no correlation between price and the RL's/WL's. For this reason is drawing a fork in a high TF try going down to at least 15 to make sure they are anchored correctly and if possible down to a 5 min TF.
The controlling swing used in the above example from May is still controlling price today and here are two 15 min TF shots from yesterdays sharp drop.
If you then add in your current short term and long term forks for that market you will end up with a multi forked chart with RL's and warning lines which show a stunning correlation between price action and the energy pf your lines. It is not unusual for RL's/WL's to exert influence on price even after price has left that ML set which can seem bizarre as you must leave many old ML's which price has long left with their RL's on your chart if price could be affected by the extended RL in the future.
Another factor is the angle of the RL. The angle of slope effects price differently and it is a wise move that you should try to find both supporting and resisting RL's. RL's that slope up with price
and RL's that slope down against price.
If you try to draw a similar chart using the above technique and price does not interact with your RL's/WL's then quite simply you have the wrong pivots and must play around until you achieve the desired effect. I have tried (and am in the process) of taking this method to its ultimate conclusion which is to draw nearly all possible controlling and regular forks and produce a chart which shows maybe 'price' itself as it is pushed and pulled by the every support & every resistance offered by the RL's. Due to the congestion that arises from so many lines it is impossible to include all on a single chart but i have succeeded in going as far as i think it possible without using a software program and have produced 3 charts in 3 TFs for each major currency pair that have eye watering accuracy at low level TF's like 5 to 15 & 30 mins. These are available for a regular subscription from mediantrader@aol.com.
However as with the most accurate charting methods of reaction and warning line grids trade entry is another art and the second posting in this series will aim to show how i have incorporated tried and tested indicators to confirm setup entries.
E-Signal does nothing(!- it will draw WL's but it is a cumbersome tool) and all RL's have to be calculated and entered manually as separate line segments.
1. The first thing i do is to appraise the chart in a high time frame and look for what i call a 'controlling swing'. This is what John Crane would call a Reaction Swing (there the similarity ends). It is in effect a correction/retracement against the prevailing market direction and the more substantial the better. For this blog i am going to use spot gold chart as an example. Firstly to keep things simple here is a recent e-signal spot gold 240 min chart.
For the moment forget all the other forks drawn except the RED coloured fork/ML set. This was a sharp retracement against the prevailing trend back in May onwards). This i chose as the controlling swing. Why do i call it that? Because as you will see price action is still being controlled within its RL's and warning lines many months on. There is always some debate about what pivots to use and my advice is that you should use pivots that abide by Dr Andrews rules even if price is not fully contained within the fork and price has exceeded (sometimes alarmingly so) the upper and lower MLP's. Then using your Metatrader tool set the fork to show extended ray RL's and warning lines. Choose colour and style to suit.
Above is the controlling swing seen in the green fork in a 60 minute chart TF with its reaction and warning lines in dark red- the latter dashed dark red. You can see the pivots used are classic P0,P1 & P2 and that price leaves the fork after some time and no clear interaction between the warning lines can be seen....don't worry. You can play about with different pivots depending on the results and it is not unusual for me to use two ML's in the same controlling swing if both give good results. More about this later but i would say that the more you add ML's the more cluttered your chart becomes and it will be unusable in high time frames due to the lattice of RL's & warning lines.-No worries.
Once you have drawn your controlling swing ML with it's extended RL's and warning lines you should add any important long and medium term forks with just RL's (not extended and no warning lines). Then you end up with a lattice of hexagonal squares that resemble Pyrapoint or
Gann grids etc.
The next thing you do is drop down to 15 or 30 min TF and your results should be similar to above. Price action walks up and down and seems bound by the shackles of your reaction and warning lines and provide support and resistance as price oscillates. There are several points that should be borne in mind. The resolution, accuracy and quality in high TF's is usually lost but is proportionate to the TF you originally draw your controlling swing in. ie if you are drawing on daily charts then you should see results in 60min charts but if you draw you controlling fork in a 60 min chart then you should go down to a 5,10,15 mins TF. For accuracy i suggest you draw in 60 or 240min and view results/trade in 10, 15 or 30 min charts. Remember even a small error in P1 P2 is serious and a tiny error in P0 is a disaster as you will see no correlation between price and the RL's/WL's. For this reason is drawing a fork in a high TF try going down to at least 15 to make sure they are anchored correctly and if possible down to a 5 min TF.
The controlling swing used in the above example from May is still controlling price today and here are two 15 min TF shots from yesterdays sharp drop.
If you then add in your current short term and long term forks for that market you will end up with a multi forked chart with RL's and warning lines which show a stunning correlation between price action and the energy pf your lines. It is not unusual for RL's/WL's to exert influence on price even after price has left that ML set which can seem bizarre as you must leave many old ML's which price has long left with their RL's on your chart if price could be affected by the extended RL in the future.
Another factor is the angle of the RL. The angle of slope effects price differently and it is a wise move that you should try to find both supporting and resisting RL's. RL's that slope up with price
and RL's that slope down against price.
If you try to draw a similar chart using the above technique and price does not interact with your RL's/WL's then quite simply you have the wrong pivots and must play around until you achieve the desired effect. I have tried (and am in the process) of taking this method to its ultimate conclusion which is to draw nearly all possible controlling and regular forks and produce a chart which shows maybe 'price' itself as it is pushed and pulled by the every support & every resistance offered by the RL's. Due to the congestion that arises from so many lines it is impossible to include all on a single chart but i have succeeded in going as far as i think it possible without using a software program and have produced 3 charts in 3 TFs for each major currency pair that have eye watering accuracy at low level TF's like 5 to 15 & 30 mins. These are available for a regular subscription from mediantrader@aol.com.
However as with the most accurate charting methods of reaction and warning line grids trade entry is another art and the second posting in this series will aim to show how i have incorporated tried and tested indicators to confirm setup entries.
Monday, 26 July 2010
Would you have invested?
Nothing too serious today(!).....i am away from my desk and have/will take no positions until
midweek.
midweek. 
Friday, 23 July 2010
€$ ....price failure at mauve CL
But still in business in the fork shown below which has great interaction between price & RL's especially when seen in a smaller TF like 10 or 15min.
€$ Friday July 23rd AM
Price action kept up the pressure on the green down sloping UMLP and popped through up to the next yellow UMLP ( price never reached the CL or took out a prior swing low so s/b expected to go higher) but to the right of price lies the first RL ( in red) but of course price is making its way to the magenta CL efficiently with only minor retracements after each upward wave/movement.
Thursday, 22 July 2010
€$ reaction Line bottleneck.........continued...
here is what we expected at the european closing a few hours ago in the previous post. This market is looking like its going higher and has already found support on the blue CL but we need to see what happens overnight in Asia. A short trade does'nt look profitable unless we take out the aqua blue line and there are half a dozen other lines (median and reaction) on different charts setups all for the €$ which are not shown here & could provide support.
€$ reaction Line bottleneck.........continued
€$ 1716hrs eurotime..Price is now bang on the confluence of the green UMLP and the RL from a ML set from a higher TF. Personally even though price has been making lower highs and lower lows until this morning i think we are now going higher but we must retrace from these levels but perhaps under 50%......back to the 12890-1.2900 level only but more likely a important RL at 1.2865 which would be bang on 50% of this recent move upwards today.
€$ reaction Line bottleneck.........
Here is Euro$ 15 min chart at 1554 eurotime...Price approaches two RL's after touching the aqua blue CL..Will it have enough energy to break through or is this the high for the session?
Wednesday, 21 July 2010
Crunch time for precious metals?
This is a market that i follow carefully but trade rarely. During the 1980's (see intro) i spent some time working at ContiCommodities, (It later became part of Refco) and was working (in part) for a very talented Account Exectutive who specialised only in Platinum & Palladium and Gold futures/options on Comex (now surprise, surprise...part of the CME!) . Subsequently i have always followed these particular precious metal markets with a keen eye but sadly my exposure did/does not make my trading any more profitable than any other futures or currency markets & i am loathe to trade gold especially after learning some nasty lessons about money management the hard way some 4 years ago..some fortunate people learn from advice but sadly i have always had to learn from experience. What was the Oscar Wilde saying? i think it goes....... " experience is the name we give to our past mistakes"!
Anyway the reason for this posting is that TO ME it appears that we are at a crucial area of support where price will indicate if it is to continue upwards or if we will see a retracement and subsequent bearish move (not a change in overall trend tho). Personally i believe we may hold these levels on the green LMLP and grey CL both shown on the Gold chart below. If we fail we will go down to test the black LMLP at $1100.00 level. Platinum concerns me as we have taken out a recent support level at $1452 but only just by a few bucks making a new swing low at $1446. If these levels hold for Gold ,Plat & Pall then it strikes me as a good entry level. All the charts below are daily and without reaction lines and BUT the next posting will show something remarkable in lower time frames and give some insight to my trading approach.
Anyway the reason for this posting is that TO ME it appears that we are at a crucial area of support where price will indicate if it is to continue upwards or if we will see a retracement and subsequent bearish move (not a change in overall trend tho). Personally i believe we may hold these levels on the green LMLP and grey CL both shown on the Gold chart below. If we fail we will go down to test the black LMLP at $1100.00 level. Platinum concerns me as we have taken out a recent support level at $1452 but only just by a few bucks making a new swing low at $1446. If these levels hold for Gold ,Plat & Pall then it strikes me as a good entry level. All the charts below are daily and without reaction lines and BUT the next posting will show something remarkable in lower time frames and give some insight to my trading approach.
Monday, 19 July 2010
Market overview Futures & Forex..continued
E-mini S & P: Looks very nasty and (to me) seems about to fall of a cliff: Outlook- lower
Gold: Unsure-sideways- still in confirmed uptrend
Copper HG: Lower- possibly sharply
USDX-$ Index: initially lower -then higher.
Gold: Unsure-sideways- still in confirmed uptrend
Copper HG: Lower- possibly sharply
USDX-$ Index: initially lower -then higher.
Market overview Futures & Forex
Here are some of the softs that i follow and often i find it a great help to abandon the small time frames and have a look at the bigger picture as often if i am too close to a market i loose objectivity.Most of the charts are all daily and all are E-signal. The forks/ML's drawn are self explanatory but if i have a strong inclination as to the overall trend i have mentioned/noted it.
Cotton:Short term down ( 2 x CL failures -red & gray). Medium/long term up.
Sugar: Short/medium looks like up.
Coffee & Cocoa: higher/up
Cotton:Short term down ( 2 x CL failures -red & gray). Medium/long term up.
Sugar: Short/medium looks like up.
Coffee & Cocoa: higher/up
Friday, 16 July 2010
€$ ......and now for the retracement?
OK, we finally topped out just a tad under 1.3010( on my Ensign feed) and i now expect a retracement to the mauve CL that i have been banging on about for weeks and that we went through yesterday at around 1.2850...this would represent somewhere between a 23.6%fib RT & a 38.2% but there's no guarantee that we will not go further. All the stochastics i use are/were up till an hour or to ago topped right up in the 90s including the daily so price could come back even further maybe down to the 1.2700 area.
Thursday, 15 July 2010
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