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The MOB Extension comes from Rex Takasugi who writes a Monthly
newsletter called "Technical Disciplines". As you know, MOB stands for "Make
or Break". Everyone knows what to do when the MOB holds price but many are
left scratching their head if price just busts right on through. The MOB
Extension was designed to give future support & resistance areas. I use it a
lot along with my normal Fib projections. Here are the MOB extension rules:
1) Draw a MOB from a Primary(P) or a Major(J) pivot only. Normally these are
from wave 1 or A or 3 or C tops & bottoms. If there isn't a P or J nearby go
down to a lower time frame and find one! On the Daily S&P I drew the MOB from
the 12/21/00 (P) pivot low.
2) Set the Fib Extension tool to 0.382, 0.618 & 1.00
3) On the Daily S&P if price closes below the MOB then:
A) Using the Fib Extension Tool measure from the FIRST SIGNIFICANT pivot (I
like to also use (P) or (M) pivots) PRIOR to the pivot the MOB was drawn
from. On the Daily S&P it would be from the 11/06/00 (J) pivot to:
B) The center line of the MOB.
C) Now extend the lines (downward in this case) from the center line of the
MOB.
You will find many times that price will run right up or down to the .382
line and stall, go back to the MOB and then run to the .618 level or more.
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