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Friday, May 20, 2011

TIME FOR ME TO FLY?



Before the day where music became some dude grabbing has balls, talking about bitches and hoe's and F this and F that, there was a band called REO Speedwagon. My favorite song of theirs is TIME FOR ME TO FLY. I wonder if the Dollar Index might be saying that to itself right now. We are at a critical spot now in that we are right into weekly resistance once again. If this market breaks out from this pattern upward, we are going to roll here. If it does not I guess we get another rollover back down. You can see now that my goofy little indicator is moving into the buy zone now. This type of look in this indicator is a better gauge of what might happen than when it goes into the opposite zone on the first bar of a contra move.

The next chart shows similar looks to this and what has happened on average, which does not really support this trade. However, this charts the average, when I look at individual occurrences that comprise this average, it is a mixed bag, some go up alot some down.



The last way to cheat I have is displayed on the next chart. This is a program that matches just bar patterns, and it basically gives us the same look, drifting lower.




It seems as though for the most part these other tools do not support this trade. However, they are computer analysis and trading is done by people, at least for now. It may well be that these patterns will correctly predict the future. I can tell you this though, when I first came across these tools I used them to filter trades and missed some very big ones where it was wrong. I certainly would prefer them to confirm my direction, but it is not a mandate.

Here is another way of looking at patterns and projecting what might happen. This is a proprietary tool, so I have "whited out" what it is. Larry Williams students will recognize what this is, it is one of his tools. When we look at this with the rising momentum and a pullback against it, we are seeing a possible buy signal. Capturing that and looking forward, we see a more bullish projection. The trick with these things is that you can load up indicators and project with them until you get the look you want to support what you are doing. I don't know how valuable this tool is at this point other than it helps find prior occurrences to look at vs having to take hours scrolling charts to look for them.




Net net here, I have the orders in you see on the chart to enter this trade since I think it is worth a swing. We will see afterwards in the post mortem whether or not these tools were right or not.







1 comment:

John M said...

Chris--

I am very happy to see that you weren't bodily lifted up to heaven yesterday, as it would have given me much less to read during the times of tribulation. (Wait a minute, aren't practically all times 'times of tribulation'? Ha ha)

I've been watching and waiting on a pretty serious dollar rally since early this year. The trick is, as you say, in the trade. It could well drop back near the lows at this point before taking off. Or it could take off right about now.

As a fan of the underdog (usually), I've been patiently saying we're going to the lows 80s at the least, perhaps much higher...at least temporarily. Something I'd like to see if only to show the 'dollar is dead' crowd how bad it is to just echo each other's opinion ad nauseum around the blogosphere until they're all convinced it's indisputable fact.