The Kane Trading Mentorship Program
June 30, 2004 Commentary (mid-week edition)-
Today's commentary will be a simple one, showing some charts of things that I am looking at. The ES is trading so poorly in my opinion that it is not worth commenting on. Although the occasional trade pops up, in general I have found that the best thing lately is to stand aside. I'm addressing the mini here from my usual perspective of 'intraday swing-trading' on the 3-minute timeframe.
On the other hand, I've been finding the FX markets to be trading pretty well, despite the month long trading range. I have been getting more and more questions with regards to my methodology and the FX markets, and all I can say is I now focus more on FX than anything else. In my opinion, my techniques work just as good in the FX markets as anywhere else I have used them.
Let's move on to the charts. I will not make a lot of comments. I am going to highlight the most basic outline of what I am watching. I will set up my own groupings for these and look, as I always do, at alternate ABCD patterns. If the reader wants to follow along on these I suggest that he or she sets up his or her own groupings.
I am also looking at the .886 retracement areas, since many of the B points are in the .447 and .486 areas. If you follow my commentaries, you know why that tells me to look at the .886 areas. As I just said, I am only highlighting the basic outline of the potential setups so the gist of what I see here is clear. I'm trying to get everyone to do his or her own work beyond that.
It's also important that you decide for yourself what your 'traded timeframe' will be as you follow along, and how you feel about the context of a potential trade. Just because I am showing these potential setups for my 'Trading Plan' here doesn't mean I intend to trade them on the timeframe that they are shown on. I sometimes choose charts that show the patterns well on the website. I choose my actual trading parameters according to what I laid out in Kane Trading on: Multiple Timeframes and 'Context'.
Let's start with cattle.

Chart 1
LC is setting up a nice potential ABCD correction to this strong uptrend. Notice the previous swing-low right at the 1.000 price projection area. The manner in which I set up my groupings and evaluate the potential trade is outlined in Kane Trading on: Trading ABCD Patterns. Let's look at gold now.

Chart 2
Gold is setting up a potential ABCD pattern. This example is loaded with 'context' concepts, right out of the book. In order for me to consider this potential setup, I must feel that high on the chart is a significant reversal or swing-high point. Do I feel that is the case here? Let's move on to bonds.

Chart 3
The long bond is forming a potential ABCD pattern. Does it make sense to me that bonds may go down (rates go up) right now? If that's my thinking, this is a setup I want to explore. Let's finish with natural gas.

Chart 4
NG is forming an ABCD pattern, set up to continue the uptrend. How does the context look in a larger timeframe? What do the other energy futures look like?
These are just some of the things I am watching. There are other setups potentially taking shape in the futures right now. I have said this before and I will say it again: if I had to trade only one setup it would be the ABCD pattern, set up to continue an existing trend. I find more of these patterns than I could ever trade.
The methods I use, and the unique twists that I have come up with, are clearly laid out in Kane Trading on: Trading ABCD Patterns. No one has laid out anything like what I have put in that book. I'm quite baffled why no one else figured out the things I put in there, but perhaps because the .886 retracement plays a big part in the methods (and until I released that no one else knew about it), they couldn't put it together with a key piece missing. I'm not sure, but at least it's available now for those that like trading these patterns.
The next commentary will be the weekend edition, posted on Sunday.
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