SPX Trendline

Discussion in 'Trading' started by piezoe, Oct 27, 2009.

  1. piezoe


    The market closed about 5 points below its weekly trendline today. With 3 more days before the weekly candle is completed, it is too soon to declare the trendline broken, but it needs to be watched closely.

    The market traded essentially with the dollar today, as it has been doing. Some forex gurus had predicted that the eur/usd would not be allowed to go much above 1.50 without intervention. In fact the eur/usd did get barely beyond 1.50 before a swift reaction to the downside occured.

    Although the market has risen more or less lock-step with a falling dollar, I am of the opinion that the market will not fall in the same proportion with a rising dollar; though so far that seems to be what it is doing. Certainly commodities are very much affected by swings in the dollar.

    This market has not been trading with much conviction. We seem to be losing steam slowly. I won't be surprised if we bounce off the trendline-- as we did before-- or consolidate sideways through it for a while. But I will be surprised if this is all we get, and it is all downhill from here, because the heavier the door the more times the market usually knocks before it opens. And once it opens the market usually tries to go back through it at least once, and sometimes succeeds.

    <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2619937>
  2. piezoe


    Well, well, well! Right back smack dab to within 4 points of the trendline. Who says Technical analysis is a bunch of Hooey?

    The only difference now is that the trendline is now officially resistance rather than support. What will Friday bring?

    If I had to bet, and I am not, I would say sideways for a while. Would this be a good place to hedge long or short positions until the market can make up its mind? Perhaps an iron condor is appropriate.
    <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2622425>
  3. risky63


    chart needs 1 more wave up (failed) which will take time( 1-3 months)
    don't tell the market what it will do.....let it tell you.
    fade, fade fade is the best strategy. period
    you only need to be smart enough to follow.....it works.
    I'm goin blackfishing tomm. have a nice day!

    :) :D :D :D :D
  4. quote from your first post: "...Some forex gurus had predicted that the eur/usd would not be allowed to go much above 1.50 without intervention.."

    Who are the gurus? Examples?
  5. auspiv


    Anyone can make a chart. Mine says support.
  6. piezoe


    This brings up a very interesting point regarding trendlines. I draw mine exactly as Victor Sperandeo does, and I mention him because he gives, in his well known book. the the most detailed explanation of drawing trendlines that I have seen anywhere.

    Here is why I have drawn the trendline (at the moment) as I have. You will note that I have drawn my line from the lowest low through the lowest high that precedes a high without passing through any tails or bars in between. This method gives a conservatively drawn trendline and I would not move it just yet to draw it through todays low, because todays low does not precede a high.\

    This is the method I was taught a long time ago and it has served me well over the years.

    I note that you have drawn your line through a higher low that does not precede a high. When you do that you of course now have a new trendline passing through the highest low. And if you move your line every time there is a new higher low, you will never have a break of the trendline! That's why I don't move the line until the higher low precedes a higher high.

    If the market continues to fall from here and we get a few lower closes on weekly bars, then I will be inclined to start drawing trendlines for a falling market using a corresponding rules. But now of course my line will be on top and I will be looking for a lower high that precedes a lower low.

    Again, if you are at all interested in knowing why I draw my trendlines as I do, I would refer you to Sperandeo's nice book for detailed discussion and examples.
  7. piezoe


    I wish I could remember where I read or heard that, but I can't recall. It may have been via a link on the Yahoo financial page or possibly on "tech ticker" with Aaron Trask who regularly interviews various "gurus". Maybe one of the ET forex people can chime in on this and give us some guidance..

  8. Which one of his books refers to trendline use and explains

  9. piezoe


    Today, Friday Oct. 30,2009, was quite interesting. The resistance of the SPX trendline proved to be formidable as the market fell away nicely. Now it seems likely to me that the rocket ride up is over for now at least. It will take some doing to get us past the trendline resistance and through the S&P 1100 barrier. Perhaps once the U.S. "wunder currency" settles down the market will tire of falling.

    Today was a superb "trend day" and an excellent day to profit from short ES futures positions, or to use short futures to hedge long market positions, which was my case.

    Have a nice weekend everyone.

    P.S. A "wunder currency" is one that holds its value for no apparent reason other than every one in the world has some in a sock drawer and would prefer its value not drop too much.
  10. piezoe


    "Trader Vic -- Methods of a Wall Street Master" Probably still in print because I believe it was quite popular. Look on Amazon for it.
    #10     Oct 30, 2009