In last night’s Swing Trader’s Insight newsletter (sign up for a two week trial here) I labeled today a “Buy day” for British Pound futures according to the Taylor Technique. Cable has had intraday high to low action the past two days, indicating net selling pressure. In addition, it took out support at 1.6030 yesterday – a 50% retracement of the rally off the 12/30 low. This likely added to selling pressure yesterday.
The recent selloff makes it likely it is reaching the “excess low’ that marks the end of a decline (a “selling auction in Market Profile parlance). The low of a decline marks the point where sellers are no longer willing to sell at lower prices and a market gets “cheap enough” for bargain hunting buyers. I keep a 2 period rate of change indicator at the bottom of the daily chart to give clues as to where bottoms or tops may occur; it can be an aid to seeing how momentum wanes then reverses at market turns.
click to enlarge
For a TT Buy day we watch the previous session low as a “reference price”; usually the move below that low is the “excess low” being formed. The move back above the previous session low is our signal that the trend is turning.
The 30 minute chart below shows how today has unfolded. Yesterday’s low is the green line; so far today it has penetrated, then rallied above there three times today. The second rally (the middle of the night in Chicago time) was a 100 tick move if you were up to take it and were day trading. I’m a swing trader, so I would hold longs, looking for more buying to develop during the day. For now I’d place stops below the low of the day. If this trade closes with a profit I’d likely go home long, looking for followthrough tonight / tomorrow.
click to enlarge
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Copyright © 2009
This feed is for personal, non-commercial use only.
The use of this feed on other websites breaches copyright. If this content is not in your news reader, it makes the page you are viewing an infringement of the copyright. (Digital Fingerprint:
f2ea78dd95959aa32f651cec20a16e23)
