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Thought this little trick might be of interest to the list. The two most
volitile times in the bond market generally follow FOMC meetings and the
montly employment report and this morning's action was no exception as
can be seen on attached 1 minute chart. Bonds and Fed Funds gave every
evidence of viewing the employment numbers positively, however the big
spike to 97-29 followed by a deep retracement made figuring a long entry
somewhat problematic. Solution was to eliminate the exuberance which
pushed price through the strong daily resistance trendline at 97-23 and
calculate retracements from the trendline. This changed the picture
radically lending support to the bullish case when the 50% retracement
area held the decline and the spike low of 97-11 was immediately
reversed.
This technique of smoothing post-announcement spikes is one I use
frequently in very short time frames, especially when I believe that a
longer trend may develop.
Earl
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