Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Wednesday, September 17, 2008

Lets make it simple.

I was trying to illustrate this a few weeks ago.... But It's roughly what you are looking for in a reversal. I can throw this into EWT, but to be honest that is just making it more complex than it needs to be........ Once the trend tops. you want to see, the "Aggressive" downtrend, Break it's trend. That isn't enough to trade off of. What you want is a separating rise.. Then once you see that, and you draw a trendline. Your time to make the trade is when it breaks that trend.
The agressive trend is in red, and you can see that it was broken. We got a separating rise. Now the danger is that the trend can accelerate. As you can see with the green line. Obviously the green line has to be broken first, and can be used as a time to initiate a long term trade. But that trend isn't broken untill it breaks the yellow trend. And still, you are going to see that still there are failures, since if you look above there is even more resistance above.
The only thing we can say is that the trend "has been" accelerating since yesterday, But... it "may be" decelerating. Which says "Look, but don't drink the coolaid."
Taste the coolaid when it breaks green, But drink on yellow.

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