Homework for Wednesday 2009.05.27 and fib lesson

27. May 2009
Comments (0)

 

Last night's prediction was right on.  See last post. 

Notes for Wednesday: 

  • If price gets that high, expect resistance at 922 (Gann level) to 923.50 (5/20 high), then 936.25 (1.272 fib extension of last move down, see Chart #2).  However, I feel 914 area might be it.  See chart #1 and #2 below.
  • Take note of the larger 50% retracement at 895.50 (target of 922.75).
  • Support:  24H PP at 898.75.  PIT PP at 888.25.

 

CHART #1: Below is a daily chart of the ES and I'm looking at the two movements/waves indicated by the blue arrows.  As you can see, this latest wave is 0.786 or 78.6% of the last wave (fib level).  The flip side of this is if our current wave extended higher than the last wave.  See Chart #2 below.


 
CHART #2:   If we extended higher than the last wave, the level we would look at would be 1.272 or 127.2% of the last wave.  That chart would look something like the one below.  Nothing in trading is 100%, but this type of ratio happens over and over in the market, so it pays to be prepared.  See Chart #3 below for another example.
 
 
 
CHART #3: To illustrate this fib ratio even further, below is another daily chart, showing the last two waves and their their relationship.  You can see that the right, blue arrow is 127.2% of the left, blue arrow... pretty much to the tick! 
 
 
 
CHART #4: We are currently range bound as dictated by those last pivot highs (see arrows).
 
 
 
 

Homework, Lesson

Disclaimer

By downloading and using any of our studies, you agree to the following disclaimer:  
 
Past performance is not necessarily indicative of future results. The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.  
 
In considering whether to trade or to authorize someone else to trade for you, you should be aware of the following:
  • If you purchase a commodity option, you may sustain a total loss of the premium and of all transaction costs.
  • If you purchase or sell a commodity future or sell a commodity option, you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position.
  • If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position.
  • If you do not provide the requested funds within the prescribed time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
  • Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a "limit move".
  • The placement of contingent orders by you or your trading advisor, such as a "stop-loss" or "stop-limit" order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
  • The high degree of leverage that is often obtainable in commodity trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains. This brief statement cannot disclose all the risks and other significant aspects of the commodity markets. Before you trade you should inquire about any rules relevant to your particular contemplated transactions and ask the firm with which you intend to trade for details about the types of redress available in both your local and other relevant jurisdictions.
 
 
neoTOOLBOX.com does not guarantee results, information, or EFS studies and scripts in any shape or form.