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How could we have entered this market before everyone else, and spotted the very beginning of a move that eventually took out the congestion to the upside?

Markets speak. To those who chart, they speak a graphic language. I suggest making part of your life's work the ability to understand what the markets are telling you. By learning to understand the way a market speaks, you can better communicate and get in step with the market. You must learn to patiently and carefully listen to the markets. Let's take a look at how to read the graphic language that one market was speaking at a couple of very important points in time.

First we'll look at how we might determine that prices might break to the downside. Then we'll see how we might determine that prices might break to the upside - all from the one congestion area. The arrows, in case you are wondering, point to three successive sagging highs followed by an entry signal to be explained next.

The upper arrow shows the three successive sagging highs. The lower arrow shows the bar on which we might have shorted this market.

But why? Sagging highs, that's why! Whenever price bars make lower highs for three successive bars, prices might be telling us they are about to move lower, perhaps even trend lower.

NOTICE THAT WITH SAGGING HIGHS, IT IS NOT NECESSARY FOR LOWS TO GO LOWER AS IT WAS WHEN WE DID THE SIMPLE COUNT. EACH LOWER HIGH COUNTS ONE. THREE SUCCESSIVE LOWER HIGHS YIELDS AN ENTRY SIGNAL WHEN THE LOW OF THE BAR THAT MADE THE THIRD LOWER HIGH IS VIOLATED. THE REVERSE OF ALL THIS IS TRUE FOR COUNTING RISING LOWS. IN THAT CASE, WE COUNT EACH SUCCESSIVE HIGHER LOW AND PLAN ON GOING LONG WHEN THE HIGH OF THE BAR MAKING THE THIRD HIGHER LOW IS VIOLATED.

Trading Range developed

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