|
|
|
|
December 5, 2003
Commentary- Today I'm going to point out something that
I've spotted in silver. Let's start with a daily chart of what I'm looking
at.
Do you see it? If you don't, don't worry
about it, it sometimes takes a while to develop the skill to spot patterns
right off. I'll highlight the chart with the pattern, and I'll also put the
grouping that I built (based on the pattern) on the chart.
Silver came right off of the grouping, but
has since bounced back up into the lower end of the grouping. This reminds me a
bit of the daily ES and bond trades that we have been watching. Let me
comment on this silver setup. Those of you who have read my book Kane Trading on: Trading ABCD
Patterns know that I don't particularly care for trading these 5-point
patterns when they are set up to end a significant trend. I like to trade them
when they set up to continue the trend. (Many traders, though, have great
success trading these patterns when they are set up to end the trend, it's just
not my preference to trade them in that manner.) If you have been following silver,
and especially gold and platinum (not to mention copper), those are markets
that I have no interest in trying to call the tops of right now. Nonetheless,
this is an interesting setup, and worth watching. If you drop down in timeframe
you can see that silver has retraced back to a .786 and started to drift a
little lower. Sometimes when I miss a setup by discovering it just after the
fact I use a 'retest' like this to start looking for entry signals. I'd like to point out that many
times when I see a strongly trending market and a setup like this forms, it
doesn't point to the ultimate reversal point, but it points to a fairly strong
'reaction'. I find many of those reactions to be tradable, as long as I trade
them in the context of being a reaction and not a full-blown reversal. I'm
watching silver in here for a potential trade of that sort. Let's move on
to an intraday setup that I saw forming in the ES on the 3-minute chart on
Friday. This is what I was looking at when I decided it's time for a grouping,
in case it played out. See if you can spot the potential pattern.
I'll add on the grouping that I formed at about this
point.
Even though the grouping looks a
little spread out, keep in mind that this chart is fairly close up. The actual
spread is less than two ticks. Now that you can see the target area, can you
see the potential pattern? I'll show how this one played out, and I'll
highlight the pattern that I was watching for.
This one was a classic, with great entry signals and
little 'heat' after entry. But there is something interesting to note with this
example, something that may come into play on the AMLN example that we are
watching. Notice that gap above the grouping? The ES fell off right in the
grouping, but didn't close the gap (if you call the gap closed based on the
closing price from the day before). The groupings proved stronger than the 'gap
magnet'. This is exactly what we are watching for if the AMLN example gets to
the potential trade area. I'm really hoping AMLN gets to the area, because this
one is a great 'case study'.
|
|
|
|
|
|
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.
|
|