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<x-rich>For those (a few, I believe) interested in cross rate US Dollar / Italian Lira, here is an interesting chart. I put it on Realtraders because I believe here we deal with technical analysis, and this chart is a perfect example of how to interpret technical tools properly, i.e., wait the signal before pass the order to your broker...
Since the spike top in march 1995, usd/itl was in a well-defined downtrend, accompanied by its (triangular) moving average, which worked well even in the past. Then at the end of last year, USD/DM broke the 12-year channel at 66 and moved upside on the italian lira (well confirmed by the action of the moving average). The movement lasted until the beginning of march, when a head and shoulders appeared to form. Edwards-Magee more and more times underlined how a pattern give its signal only when it's definitively broken, and in fact, after two test of the moving average (and having touched the trendline), dollar is giving some regrets to the italian bears, who are running to close their short position. If a recall correctly, Elder once says "when an apparent h&s is followed by price action overcoming its right shoulder, a potential bearish signal becomes a strong bullish signal"...
So here is the lesson: "do not anticipate a signal, and follow the trend!"
ciao
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<x-rich>
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<bold>Gaetano Arnaldo Evangelista</bold> - BARI (Italy)
E-mail: ageitaly@xxxxxx
URL: http://www.geocities.com/wallstreet/8492
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