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Peter,
This is the tricky part, as you point out.
Borrowing heavily from Kasanjian Research's
PulseRate Monthly Newsletters; some thoughts.
There are three possibilities for subsequent price
action: price reversal, price acceleration, or price
breakout of a continuation pattern.
When price is moving sharply into the projected
energy point (EP), expect a reversal.
When price action approaching the EP is
moving on a relatively shallow angle, usually
tracking a support or resistance line,
expect an acceleration.
When price is consolidating leading up to the EP,
expect a breakout. Look at a momentum indicator,
I recommend Eddie Kwong's GRII he so kindly has
posted on the RealTrader's Secret Fomula website.
If the indicator is dropping into the EP, expect it
to bottom there, and price to punch out to the
upside; (look at momentum leading up to 12/1/97
on the cash sp500). Additionally, refer to classical
chart patterns, and their probabilities of resolution.
As for projections from a swing high vs swing
low, usually projections from two lows will be
another low, from two highs another high;
about 70% of the time. Using a swing low and
a swing high, no probable direction.
Remember to take into consideration price
action at the EP: Candlestick formations, Reversal
days.
Now, the next question: how long will the move
last? Continue the analysis, looking for that next
energy point. In the meantime, lock in profits or
protect your initial trade with a stop loss. Please
use a stop loss, these markets have a tendency
to bankrupt trading accounts when not in use.
Have a profitable new year.
Rory Lewellen RL2946@xxxxxxx
_________________________________________
Date: Wed, 03 Dec 1997 20:44:26 -0800
From: Peter Lim <peterl@xxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: GEN:Directional Turning Points
Message-ID: <3.0.32.19971203204308.006a3234@xxxxxxxxxxxxxx>
Mime-Version: 1.0
Content-Type: text/plain; charset="us-ascii"
While the use of Fibonacci, Gann and Elliot wave techniques allow for one
to forecast market turning points, it is intriguing to take it a step
further to determine the direction of that turning point.
So if a projection is run from a swing high, what techniques are available
to know that the projection is pointing to a swing low and vice versa?
The use of dynamic cycle ratios, and time clustering allow for one to know
that a high probability of a turning point exists, but how is it possible
to determine that the turning point is a low or high ?
Regards
Peter Lim
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