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Attached is chart of daily bond futures. Note the confluence of the
horizontal line drawn from the 4/26 Pivot Low, the trendline drawn across
the 3/4 and 4/1 pivot lows and the .382% retracement. This is a 10 tick
range between 120^08 and 119^30. It is reasonable to expect that bonds will
rally into this range. If so, watch the action in this range. A strong rally
through this area which continues to the down trend line will be the first
signs of a possible trend change in bonds and interest rates. More likely, I
believe, is a failure and reversal in this range with another impulse to new
lows in the 117-118 area. There is not a whole lot more that one needs to
trade (no black boxes, no fancy indicators, no guru's): a trend (declining
trend line) and a tight range to watch for a price reversal. Should a
reversal occur on or across this range (my preference - close above the
range followed by a close below the range) one has a high probability trade
with stop placement just above the high of the reversal.
Earl
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