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Now, please take a look at the Falling wedge in the Dec99 T-Bond future (I am using the Dec contract since the wedge developed while the Dec contract was the contract trading).
we have a perfect falling wedge. The pivots 1-6 perfectly hits the trendlines.
However when we come to point 7, price falls short of the upper trendline(closed at a perfect 78.% (fib). retracement) and we have a breakdown at point 8 during the week 12-15 oct (please note the dates)
Was this a false break down or a signal of things to come?
Looking at point 9 could give a clue. If 8 was false we "should" have had a break out above the wedge and higher prices to come.
However, we had another "fooler": this time on the upside point 9 had a HIGH above point 7 but not a CLOSE(the March Bond shows the same thing, if only by ONE tick). No follow through on the upside and consequently prices began to fall again and the next high (11) was much lower than earlier highs(stopped at a perfect 61.8% of the earlier rise. Sure enough the next move was a breakdown again through the "old" wedge.
So what do we have now? Another false break out or is this the real thing?
If we look at the March Tbond again we find at THIS bottom the CLOSE is lower than the Oct 25 Close. Although the Oct 25 LOW was lower than the last low.
This is a perfect scenario for confusion. Although we did not have a new low we have had 3 closes below the Oct23 close. We have breakouts all over the place at a time when the concept of linking contracts are lost due to change in the underlying tresury Bond to 6%.
My next post may clearify things
stig
Attachment Converted: "f:\eudora\attach\DecBond.gif"
Attachment Converted: "f:\eudora\attach\Feb TBond.gif"
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