Wednesday, 26 December 2012

Long Palladium short Gold. plus ES H13 looks like we are going the cliff


Here is a chart of Palladium ( Comex futures)

 Here is a chart of the spread  long Palladium short gold. The diff has been widening for some years and is now at -$976 gold 'under'. Gold is about $1665/oz and Palladium is $690/oz

 Heres the recent activity and two simple andrews forks
 Heres some more forks ( FNL's) and their reaction lines

 It certainly looks as though we may have more upside potential in 2013 and could see the diff (spread) narrow and climb to at least - $800

Tobruk siege 1941 WW2 North Africa...Happy Holidays/Xmas

To provide a contrast to endless reaction line techincal analysis and charts of futures/FX  markets I am continuing my twice yearly holiday( Xmas & Easter) postings about my late fathers WW2 photos taken on a Kodak Brownie camera when he was 18 in 1939 until 1945 . I will publish more of Tobruk, Halfaya pass, Alamien etc and also have liberation of Paris photos never seen before.
For previous links click here:

 My fathers shell hole/billet in Tobruk harbour during the first siege of Tobruk .North Africa 1941
 HMS (Gunboat) Ladybird on fire in Tobruk Harbour
  diary extracts shown below: My father was a basic a squaddie conscript of the lowest private rank in the British Army RAOC and was stationed right in the harbour of Tobruk where the ammunition stores were kept. He had been about to take his accountancy exams in London in 1939 when he was 'called up' to join the army and was unable to sit the exam to become an articled clerk/accountant.
He ended the war as a Sergent Major and passed his accountancy exams in London in 1948.He died in 1985.He held The Tobruk Medal as well as The Africa star and other usual British Empire medals.
 The following days were the second time by 1941 he would be under enemy fire.This siege in 1941 and following battles in 1942/43 and 44 had a profound effect on his life and was one of the most important character forming events of his life (in his opinion).
His diary starts getting exciting ( you can see he lists all his money and purchases in the right hand column of each day (Choc is chocolate) and other comments on the left hand side) on Wed 9th April 1941 " more cheerful- heavy attack by air morning and night" Thursday 10th April "Dive bombed-up late Derna reported taken. Situation critical- Gun fire heavy and units app 10 miles away" Friday 11th April "Things getting worse, gun fire heavier, 3 daylight raids bombing, planes down". Saturday 12th "Raids eased,Tobruk encircled by armoured units, harbour open, worked very late. tired!"

Page above:
 Sunday 13th April 1941 ( Easter day) " Things worse. Encirclement being more complete,Harbour open, moved billets"
Monday 14th April 1941:" Intense air raid of 40 planes- followed by 'Stand By' from 7.30am-10.30am. "Easter eggs?"- Sollum gone"(next few words unintelligible)
Tuesday 15th April 1941:" Rumours of recapture of Sollum  later Bardia xxxxxminised by heavy gunfire- Hurry hurry! More German troops"
Wednesday 16th April 1941: "Appears Sollum Bardia not taken-Bad.Very disconsolate.  Later Fort Capuzzo taken. Night off. Read".
Thursday 17th April 1941: "more cheerful tone. Road to Alex ( Alexandria) open per S.M- Conflicting reports. 'Stand To' 13.45-14.40. On guard night-heavy raid"
Friday 18th April 1941: "Went to work 10.45 as on guard- pxxx xxxxx. Intense raid at night."
Saturday 19th April 1941: " Worked hard all day several raids until terrible one about 15.10 hrs bomb RSN overhead shook us-"
Sunday 20th April 1941: " Germans outside. Where are our troops??. ....... "

 and heres one of the detailed photos he captured from the german para during El Alamain in Autumn 1942:

 Below: A knocked out Italian tank
Italian Prisoners of war
A knocked out Italian Signal lorry

Wednesday, 19 December 2012

Gold..continued (plus market gossip)

Take note of the fast stochastic 'ribbons' on the weekly and monthly time frames in the charts below with the
B line stochastics indicator panels and Heiken Ashi bars and Maccy-d.

 This is a crucial support area at $1669. if we drop through here we really could see another 10 to 25 buck fall. However studies using the MT4 RL/pithcfork indicator ( 4th down from the top) show two upsloping RL's. Price and time have not yet converged onto this area but we could see a zoom down through them or a pin bar and 10$ rise before we 'pass  down through' them in the coming weeks..remember what happened the first week in dec11/Jan12 ???. This is a time issue.  I understand from a source at a major bullion desk there are 'substantial' stops at $1648 and 'massive' stops at $1636-39. He has proved reliable in the past.

Friday, 14 December 2012

Historical Median/Reaction lines and build yourself price structure with organic support and resistance-EurUsd-irrefutable proof

Build/show price structure...To do this I use my own pivot 'rating agency'. I evaluate-initially visually, and then mathematically every pivot on my chart. I start in the higher time frames simply because intra day charts are meaningless for this purpose as intra day closing prices are a completely arbitrary construct in which a discrete time structure is imposed on continuous price data. Remember all charts are just data presentation mechanisms and the market does not have a concept of any of them; they are purely our creation. The close of a bar is a snapshot of a price traded in the flow of market activity but with 24 hour trading there is only one really true close which is now the weekend. I suggest you start with the weekly chart or better still the monthly. Remember, it stands to reason that the 'king' pivot of a monthly chart is more important the king pivot of a daily chart. My monthly Ace trumps your daily Knave/Jack. Get it? So it stands to reason and it is confirmed that the higher the time frame your reaction/Median line originates the greater the potential influence it will have on price. Also my research and observations revealed that recent price activity has a greater influence on current price. This is a relative argument and may seem like an oxymoron in relation to my previous comment  but simply put the most important pivots in the weekly TF are the most recent in the series.
Lets take an example: Heres the monthly chart of cash/spot  EURUSD:
I have in the above chart added a simple modified Schiff fork. The mid point of the swing ( blue line) is P0 and then use the most recent two swing highs and lows. Now we manually add the reaction lines and hey presto!!!
Now  below we drop down to the 240 min ( remember the dynamics of your/all charting platforms distort line locations)

 OK now back to the weekly and draw this fork( below)
Now drop down to the 240 min and add these recent pivot values and relationships which express three pivots each. This D/sloping fork has 2 warning lines....
Now two upsloping forks off these two moderate (recent) low pivots
Now add this fork plus RL's in the 60 min TF
Well, That shows us where the recent trend came from.
FINALLY drop down to 10 or 14 mins and you get this....

and this is the log scaling version ( note the difference)
 we have only drawn a few forks and if you give the forks different values ( ie thicker lines for the higher times frames) you can see the highest probability support and resistance

CONCLUSION: So, what we have done here is i believe reveal perhaps .01% of true market structure. I have wrestled with this problem for some years and yes i have tried to draw dozens of forks and reaction lines to attempt to reveal more but what i found was that apart from loosing clarity by having an over cluttered chart was that some forks are more important than others and have a greater effect on price. The higher the time frame the reaction line and median lines originate in the higher the probability of them offering support/res ie a new pivot but each time frame is relative to its study; after all a weekly pivot can take days or weeks to form and yet within that single weekly bar there are another set of pertinent ML'sRL's. After many years of observing price within these linear studies I now create multiple studies for example the e mini S&P. I add forks/RL's in time layers as i drop down from daily to 240 to 120 to 60 to30 etc. What is really needed is a new data presentation system such as this 3D graphical illustration of price as seen here on Nanex website and to get away from using bars, candles, tick charts. It is sadly beyond my skills or intellect to create such a program to show price action around a linear study such as a ML or RL in 3D -let alone an animated one such as the NANEX link above.
Lastly remember one thing about charts with pitchforks and reaction lines. It is what i call the 'Russian Doll' theory. Every fork drawn expresses a series of pivots that are contained within a wave but that wave is part of a greater/larger wave and thus is contained in another fork and that fork will be within another fork etc. The most important relationship is between the major pivot and the next immediate pivot ( before any retracement) and then the most recent pivot. In other words P0 is a big Low then take the first high ( end of wave 1) and not the highest high as P1 then the most recent low as P2..... the results will astound you. The lattice effect that is created of these reaction and warning lines is never definitive but this selection of what i call the FIRST and LAST pivots or FNL forks is the best to describe price action and deals with the awful problem presented by using an Andrews fork on pivots that create a Andrews forks at absurd angles. In the FNL fork the first 2 or 3 sets of reaction lines have the greatest effect but as you can see in the example this is the fork that just keep giving!!

So some years ago I asked myself these questions.
1. How, using new observations and understanding do i best build a chart and use pitchforks (all types) and reaction lines that best expresses price and that has the greatest correlation and shows the highest possibility/probability organic framework ( rather than just multiple random studies)?
2. How do I construct a new (and any existing) set of rules for trade entries and recognised trade setups and how do i build and integrate them purposefully and  profitably into a unique trading system?
If you wish to know more about what i developed (and despite being a 'naked' trading system is consistently profitable over the last 3yrs 4 months) you can either contact me directly or view our existing website.
I believe I am one of the few sites to publish our weekly equity curve, trades and P&L-warts and all!!