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-----Oprindelig meddelelse-----
Fra: Daniel Goncharoff <thegonch@xxxxxxxxxx>
Til: realtraders@xxxxxxxxxxx <realtraders@xxxxxxxxxxx>
Dato: 5. november 2000 19:58
Emne: Re: Sv: [RT] More on Bonds
>Stig
>
>I don't know much about the bond contract, or about drawing wedges, but
>I am surprised at the line you have for the bottom of the wedge. Clearly
>in early October the line you have was violated, then the contract
>reversed. OTOH if you drew the wedge to contain the early October low,
>you would not have violated the wedge today, and would need to keep
>watching to see what the contract does here at the bottom of the wedge.
You are rising a quite legitimite question and you are pointing to the dilemma one is always dealing with when drawing trendlines for patterns.
And you can also draw the line you mention. But then you have a problem. Will you chage the bottom line the next time it is violated?
In the case shown, the wedge is complete with 5 connectionpoints allready on Sep 21, so what happens AFTER that date gives a clue on the future.
The break beginning at the beginning of Oct and price then returning back into the wedge can be either of TWO things (and you DON'T know which at the time).
1 either it's a sign of weaknes and a break down will come some time in the future.
2 Or It's a Fooler ( foolers are almost always followed by violent moves in the other directions) and in this case we should probably have had a break upside out of the wedge if it was a fooler.
BUT WE DIDN'T. Just a normal touch and go - down to the lower trend line.
SO IT WAS NOT A FOOLER. in other words IT MUST HAVE BEEN A SIGN OF WEAKNESS.
The next break last Friday was, in my opinion a confirmation of that weaknes. Taking into account the longterm analysis which pointed to a possible top at the last touch of the wedge I am still convinced we should have a further slide.
Another thing to note: the upper and lower trendlines have been labeld with green figures 1-5. Each line has been touched 5 times. what is interesting is that in the ABCDEF wedge BCE and F were all touched twice. Not D. Only once plus a "fooler", followed by a sharp downswing to the lower trend and the sign of weakness.
>So I guess my question is, why are you putting so much confidence in a
>wedge already violated once, and are you sure your wedge is the proper
>one?
Beacause, we had a perfect wedge BEFORE the October break.
Edwards & Magee (spelling?)demonstrates parallell trendlines
So what could have developed was a parallell trendline to my sign of weaknes, which could have been supportive, but such a line was broken yesterday as you can see in this gif
But none of the breaks out of theis Bondwedge generates paralell lines (watch the small blue line from the Oct break. That's the last ray of hope for support, but Monday and Tuesday closed below it, so my bet is still that we should have lower bondprices).
Of course we can have a DOUBLE fooler, since everything is possible. and that would certainly creaty an interesting scenario...
Hope this helps
stig
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