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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.
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.
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.
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.
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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