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 May 1,
2005 Commentary (weekend edition)-
When I
started this website and began writing up my methodology I had no idea where
all this was going. In fact, I didn't really have a pre-decided direction.
Things have just evolved, and I evolved with them. I never could have even
begun to imagine what I offer now when I started this project. I couldn't have
imagined selling book sets and support to major hedge funds and floor traders,
or my Fibonacci-derived numbers and techniques being used around the
world.
I didn't think I would be courted by funds to join them, or to be
chosen as a mentor for people that run major newsletters or are instructors
themselves for places so famous just about everyone has heard of them. Nor did
I think I'd be asked to be on television, write for magazines, contribute to
famed websites, or be asked to be an introducing broker for a major
firm.
This is just a partial list of things that have happened since I
started this project. There are many things 'brewing' right now, some of which
could bring about big changes here. I am looking over various things, and I may
or may not do some, all, or any of them. If I do decide to do anything the
readers here will be among the first to know, of course.
Let's move on
to some things I posted in the members' section this week.
I have been 'all over' crude oil, literally amazing myself at how the setups
and areas I posted in advance called the turns in crude as close to 'dead on'
as one can have in the real world. I also pointed out a really nice 'wave 4
bounce' setup in the Canadian dollar. This 'wave 4 bounce' setup is not simply
playing an Elliot wave 4 in one manner or another, it is a unique set of
conditions that I have discovered that has to do with certain 5-point pattern
setups and when I expect them to fail.
I have defined an entire layout and setup
that I like to trade, and I likely have enough material to write up an entire
book on this (no, I'm not writing any more books, at least for a long time). A
lot of the core ideas are scattered throughout my other books, though, and laid
out in pretty good detail in Kane
Trading on: A Totally New 5-Point Pattern.
If I show
charts for this setup many will just say 'Oh, that's just a wave 4 trade', but
that's not the case whatsoever. Like the 'context' that I laid out in Kane Trading on: Multiple Timeframes and
'Context', the 'context' here is a filter, and the specific parameters
that I use are what makes this a setup I watch for. I cover a lot of these in
the members' section, and it is perhaps the most commented on thing I get
feedback on from that service.
With that, I will show series of crude setups
and charts, and then the Canadian dollar setup. I am not going to do a lot in
the way of descriptions. I'll start with crude as it was reacting to my first
setup.
Crude rocketed off within ten cents of a
tight grouping I had right at a ML lower // and a reaction line intersection.
Once the price gets close, I start looking for triggers. Shortly after this
started to move a bit I saw a nice looking setup coming.
I had another one of my 'new' numbers showing
up right at the intersection of the ML upper // and another reaction line. I
had a lot more than this on my working charts that supported this area, but
this is the framework. Notice how this setup gives me not only price but a time
factor as well. Let's see what happened from here. Keep in mind that I am
showing these before the fact in the members' section, and with a lot more
detail, description, and intermediate charting.
I was watching the 1.272 external retracement
for a reaction. Crude reversed just a fraction above it, right off the reaction
line, moving right to the ML. This area was going to tell me a lot about
crude's real intentions. Let's see what happened from here.
Crude reversed right back down, and is now
possibly setting up an ABCD pattern. The upper area grouping is the 1.000 ABCD,
right at the line intersections. The lower grouping is made up entirely of
numbers I discovered or pioneered. I am not all that convinced yet that crude
is ready to start back up after an ABCD correction, so I am going to be
watching price action quite closely if either of the two areas I highlighted
are hit. Price action will tell the tale for me. I need a lot more than a PTA
to make a trade.
My watching crude so closely is part of an entire assessment I am
trying to make on the commodities, in order to get a handle on where they are
headed. This will play into the direction of the stock market, in my opinion. I
laid out a setup in the CRB index, in wheat, and in the commodity based
currencies. All these, and many more things I am watching, are all giving me
clues as to what I think may be going on.
Let's finish with the setup I
pointed out in the Canadian dollar. I will show the electronic futures
contract, but generally I actually trade the FX market for setups like
this.
Here's the CD just after it started to react
to my setup. I just showed the one basic number to highlight where I expected
the reaction to take place if the setup was going to play out. I'll finish with
the CD at the end of this week.
The CD did exactly what I expected, and
rolled down, exceeding the 1.272 external retracement, making it to the 1.618,
where it began to react. As I said, though, this is not just a play for
wave 5 trade at all. It is a specific setup based on a lot of research about
5-point patterns. Now I wait and see what happens from here, and keep my
management plan (as outlined in Kane
Trading on: Trade Management) working for me.
This is a
very condensed version of just a few of the things I covered recently in the
members' section. I generally post more on an average trading day in there than
I do in this entire free commentary posting, with a lot more detail and plenty
of new and unpublished material, too. If it sounds like I am pushing the
service a bit, I am. It's where all my best work is, and if you want to study
my material in great detail, that's the place where you can do it.
The next
commentary will be next weekend's edition, posted by Sunday evening May 8,
2005.
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