|
|
| |
|
 December 2, 2003
Commentary-
Today was kind of a rest day for the indices
and the bonds. The bonds had an inside day and the ES almost had one, besting
yesterday's high by two ticks. It's interesting that gold hit 407, basis the
February contract, and the dollar continued its plunge, now solidly below the
October '98 low. All this while the CRB index is smoking to new highs.
Speaking of
that smoking CRB, where does some of that rise come from, besides gold and
crude oil? If you want to have some fun, take a look at a chart for soybeans.
Now, that's a run. Those readers that have my book on ABCD patterns know what
they are looking at on that chart. I'd be hesitant to play it this late in the
run, but if I wanted to play for a continuation on the beans, I doubt I could
have found a better signal.
Let's look at that daily bond chart, with what I
promised to add onto the chart.
I hope you weren't expecting anything
spectacular. Those two trendlines are on every conventional trader's charts on
the planet, in my opinion. If the pattern is going to play out and the
downtrend is going to continue, these lines have to be taken out. Watch this
area closely for game playing, or a potential end to the trend. That is, if the
bond gets there. I would be quite surprised (something that does happen with
some frequency) if these lines weren't tested or broken, if for nothing more
than the game playing ability this area will give to the big players.
Let's look at
something I've wanted to show for a few days now. Before I built the groupings
for the daily chart of the ES, I put some lines on the chart. Let's look at
these lines, with the chart current as of today.
I put this regression channel on the chart several days
before the ES started to drop towards the groupings, and haven't adjusted it
since. I also put another line on the chart, using a technique outlined in
Kane Trading on: Trailing
Stops and Kane Trading on:
Entry Techniques. Notice how the grouping coincided with the area right
between the two lower lines, and also how the actual reversal area coincided
with this area between the lines. This is not a coincidence, in my experience.
I make heavy use of regression channels and my own twists on them. They can be
great supplements to pattern and Fibonacci trading.
Let's go back
to last Wednesday and look at some intraday action on the ES on a 3-minute
chart. I want to further emphasize my point about looking for obvious things
while using patterns and Fibonacci in trading. Look at this chart and think
about what you see, and what it tells you.
This chart says one thing to me. I better be short. I'm
thinking: 'Where's an opportunity to get short?' I'm not thinking patterns
here. I might be thinking Fibonacci to define a good area to get short, but I
see a downtrend, and I'm thinking about trend entry techniques here. Let's look
at the time period right after this chart was captured.
What do you see? I see one thing,
and that's an uptrend I must get on board. I may use some grouping techniques
to help find a place to enter, but I'm just thinking trend. I have to get on
this trend. My point is, patterns and Fibonacci are great for trading, but if
you get too caught up with them, you may miss what is right in front of you. I
don't need hardly anything except my execution platform and the above chart to
trade this one.
Patterns help me find where trends may start, and Fibonacci
groupings help me with finding areas where the trend has finished correcting.
But when the trend is just going like this, I have a group of trend entry
techniques that I use. Some traders prefer to only trade the patterns and
Fibonacci areas, and that's fine. I just like to be more 'diversified', and
ready and able to trade charts like the last two.
It's up to each individual trader
to decide if they want to include trends like this in their 'Trading Plan'. For
me, it's something I want to do. And to be a good trading educator, I want to
get traders thinking about everything they see, even if they don't trade
it.
|
|
|
| |
|
|
 NOTE: Reading this page or any page on the Kane
Trading website, or utilizing this website and any material
contained herein in any way, shall constitute an acknowledgement
that you have read, understood and agreed
to all the
disclaimers,
terms & conditions, and
policies of this site.
|
|
|
This website is best viewed with
MSIE 6.0, text size set to medium, and screen resolution set to 1024 by 768.
Copyright © 2003 Kane
Trading. All rights reserved.
|
|
