|
|
| |
|
 February
4, 2007 Commentary (weekend edition)-
Some weeks I
have to struggle a bit to decide what I want to show in here because there are
so many things, from an educational perspective, that I have to choose from.
This week was particularly difficult, in that regard. There were just so many
choices... I always try to pick things that show various subtle aspects of the
methodology, as opposed to just taking the 'easy' way out and simply showing
some great setups from the past week and how they played out. I'm really
'busting my hump' in here trying to bring interesting ideas and concepts to the
reader. Jeez, and all for free, too.
I will start with last week's chart of the
week, in the Pound.
I added the comment on the chart not only to
imply one of the reasons I was looking at this spot, but also to point out that
this was not a 'full-blown' potential trade area (PTA) here for me, but more
something that I wanted to watch, in the 'context' of what was already
unfolding. And what was that? Just look at the daily chart. If you've learned
anything about my methodology from reading this commentary you'll know exactly
what I mean here.
Let's move ahead to today, and see what the Pound did.
This is very interesting, indeed. The Pound
'tested' the area twice, and then bounced up. So far, exactly as I suspected.
It then rolled over and did a deeper 'test' of that upper parallel, solidly
below the trendline, and then up to a new high for the upmove. Notice how it
went back to tracking that trendline, as though it had never even dropped below
it. No doubt in my mind it is 'seeing' a lot of the things I have on the chart.
But is there more to see here?
Let's look at the price action on a 60-minute
all-sessions chart. I suggest, as usual, that you redo this on a tick
chart.
I added one of my median line sets on there,
and a few retracements. Notice how the move up was right to a key .382 area,
where I was watching the price action closely. It rolls down to a .618
retracement area, right at the lower parallel for the set I added. Look at how
the price action is creeping that lower parallel. This is not a strong, bullish
signal here. I want to see this rocket off this area. Sure, I have that
trendline right below, and maybe that will hold this, but after that, I'd be
watching that main area once more. At each stage I have a choice to make, and
my evaluation of my premise can be aided by the information garnered at each
spot.
Let's see how it played out.
The Pound did break down through that lower
parallel it was creeping along, on 'news', showing zero respect for the
trendline on the way down. It went right to the old upper parallel I was
watching, bounced a bit, and then did a final flush out before starting to run
back up strongly. Just look at how it 'saw' that upsloping trendline, as well
as the median line for that set. The point is, I found an area that produced a
reaction, and then 'news' started to hit all over, shaking the currencies and
gold like crazy. Still, I was able to put my usual things on the chart and
study the action across various timeframes, and use that information in my
various assessments. This curious area was 'seen', and if it weren't for
'news', it may well have just continued right on up off that area.
Let's follow
up on rates, again using the 10-year index.
Here's where I left off last week. Let me
quote from the last commentary: "This week they came out of 'congestion'
strong, and have been smoking up since. Notice their position at that upper
division line." I went on to urge the reader to do some work on the weekly
chart for the major areas of focus. For now, though, I can see this division
line, and I can see that upper parallel quite a bit overhead. One step at a
time, though. Depending on my timeframe, I can be looking at this in many ways,
from management to assessment, to lower timeframe potential trades.
Let's see what happened this past
week.
Rates rolled dead off that division line
(shown at the upper arrow), right back to the median line (shown at the last
arrow), where they started to bounce. Now, from what I showed last week, and
the comments I made, should you have been 'all over' this, in your studies? I
sure hope so. And what is one thing I think you should you have seen?
I'll add a
set onto the chart. Sure, this looks a lot better on the lower timeframe, but
I'm not going to recreate all my work to do this here. I need to leave
something for you to do.
I had this set on my chart, waiting to see if
rates hit the area of the lower line intersection. If so, I wanted to see what
happened. I highlighted this with the first arrow of the lower arrows. Rates
went right there, and bounced right up. The second arrow of the upper arrows
shows how rates went right to the median line, where they again reacted
solidly. (I may have a bad tick in here, though, I'm still checking on this, so
it might not have made it up quite this far, so check your own data on this. If
the tick I suspect is bad is excluded, it reacted right in the area of the
division line (not shown).)
Notice the second reaction at that lower parallel there,
highlighted with the second arrow of the lower arrows. Check this out on a
lower timeframe chart. From line to line, area to area. The really important
thing to me is that these are not 'after-the-fact' sets I add on once I've seen
what has happened. I do pretty much the same thing, as things unfold, on
everything I follow. That goes without saying, since I've posted so many in
advance in here I'm wore out on doing it. It's just a process I follow, as any
mentor student would likely tell you, and I just repeat it over and
over.
Now, am I saying this is some panacea, some guarantee to profits?
Hang on a second, I'm laughing so hard at my own question I have to take a
break. Okay, I'm ready. Of course not. This is one thing of many that I
do to try to gain a small, realistic edge in my overall, comprehensive 'Trading
Plan'. You have to develop your own plan. Maybe you like some of what you see
in here. If so, experiment with it and see if it has any use for you. If you
like it and want to see more of what I've developed, buy the books. Again, if you like that and can
make use of it, and want to go to another level, get the members' archive. Same
thing. You find it useful and want the next level, do a mentorship.
The level you
want to get to determines how much you want to do with my material. After the
mentorship you can do additional mentorships if you want. I've done this, and
it becomes more of an internship. And if you don't find the material useful,
keep searching for useful material elsewhere. It's all about your own journey
to find things that you feel help you develop an edge in your own 'Trading
Plan'. If you can develop all your own material, that's great, and to an extent
that's what I have done. But if you aren't able to do that, or if you don't
want to reinvent the wheel on a lot of things, that's when I suggest studying
the work of others, to help create a foundation to work from in developing your
own style and plan. I hope these comments help.
As I close, let me mention a few
things. I can't get to everything, and it's not my job in here to do that
anyway. Look at gold, which is simply fascinating. Look at the OIH, which
dipped a little lower that the .447 retracement, but otherwise is follow what I
was watching to a T. Look at crude, which, via the tracking stock USO (for you
stock traders), is this week's chart of the week. Is that the lowest price we
will ever see on crude, for the rest of history? Time will tell. I don't need
to know that to trade. Look at coffee, OJ, cattle, and in a bit, lean hogs. All
are looking 'interesting'. And what about all these new all-time highs in this
roaring bull market, with mutual funds still showing outflows and the
commercials still wildly short? Who is running this up? The bottom line is, the
action is strong, and I still stick to what I've said, and that is that this is
likely the best trading action I can ever recall seeing.
The next
commentary will be next weekend's edition, posted by Sunday evening, February
11, 2007.
|
|
|
| |
|
|
 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
acknowledgment 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
© 2007 Kane Trading. All rights reserved.
|
|
