While gold fights the 1600$ level and EurUsd does the same at 1.3000 i remain fixed on the DAX. This is a rare contratrend trade for me as usually i will try to pick up the first retracement in a new trend and trade it as an intraday or short swing trade but following on from this mornings post i wanted to show this chart which shows what i called the 'layered' effect of multiple PF's from high time frames ( daily and upwards) which supply horizontal lines when viewed in low time frames. The above chart shows the battle between the downsloping reaction line(from a unorthadox pitchfork) the royal blue CL form this daily fork (P0: 6436 on 16/3/2011 then P1 7623 on 2 may 11 and finally 4971 on 12 sept 2011). The reaction line IS DRAWN AUTOMATICALLY AND CANNOT BE TWEAKED, it comes form a 'local' fork and (uses a technique that is mine of not using the highest high but the first minor wave high of P0 to p1)...it works every time is always the first line of resistance that i trade off.
NOTE THAT IN THE DIFFERENT TIME FRAMES THE BLUE CENTRE LINE IS IN DIFFERENT POSITIONS...ONE SHOWING PRICE ABOVE AND ONE SHOWING PRICE BELOW IT HAVING BROKEN DOWN THROUGH.
As yet the support offered by the blue CL is still intact even though in the 15 min chart it appears below. Price will battle on between these two with lower highs as the reaction line draws price lower until a break out at the end point of confluence where they cross each other.
Look at the energy price gets when it hits the blue ML...it may well bounce with the energy held in that blue line ( and there maybe a trade in there for scalping) but i have seen this a thousand time. price will return to the blue line and each time it touches the energy will diminish until it passes down through (or breaks out above the reaction line).
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