December Dow Jones – Dow Jones futures closed lower after the Federal Reserve failed to boost confidence that the economy has begun to strengthen. However, the Dow Jones did rally just enough trade above the 9797 high posted on September 17. In the last update I said the market should trade to a new high during this reversal timing to reach the target objective. The Dow Jones futures traded to high of 9857 right after the fed announcement, but quickly lost momentum and turned lower and closed down on the day. This is a bearish “trail day” pattern that acts a strong directional indicator. – Sell the e-mini Dow Jones at 9675 stop with a stop loss at 9865.
December Japanese yen – After completing a five-wave reaction cycle, the Japanese yen futures peaked at the ascending centerline after it posted a double top. From this swing high, the Japanese yen traded lower over the following five sessions before finding support at the 20-day SMA (1.0812). Tuesday's corrective bounce traded into the 60% sell window, setting up a potential selling opportunity.
November Crude oil – Long from 71.75 – The long signal was triggered before the energy report was released. Traders were expecting a 2.5 million barrel drawdown, but got a 2.5 million increase. This sent the market into a downward spiral and closed the long at the stop the stop loss at 69.70.
December Silver –On September 17, I posted an alert on the www.reversaltracker.com/blog that Silver had reached the target objective, where the descending reaction line and ascending centerline were converging. The high was $17.69. Three days later, Silver is trading over $1.00 lower, currently at $16.60, as we approach the next reversal swing day, due on Tuesday. A lower trade into this swing date can set up a reversal and rebound into the 60% sell window that begins at 17.21. Market structure is still showing the market in an upward trend, but Silver has completed a bullish reaction cycle, therefore, it could be moving into a correction or consolidation phase before resuming the upward trend. I will wait one more day to allow the market to complete the current pattern.
December Gold – Short from $1,014.20 – last price @ $1,009.00 – Gold didn't give us the two higher closes to form a true reaction swing pattern, but the price action does suggest a quick drop to $995.00. – Hold short position with the stop loss at $1,921.00.
December Corn –Long $3.30 – last price @ $3.30 ¼ - Corn futures were supported by the weakening dollar and closed higher for the first time in five sessions. The higher close marks the final stage of a possible bullish TR pattern setting up in the December Corn. After Tuesday's rally, the market has settled back over the past two days and formed a possible reaction swing pattern. The retracement has traded into the 60% buy window and tested support at the lower parallel action line on Monday. Tuesday's session opened steady and traded higher throughout the session and is showing good separation from the lower parallel line. – Hold the long position with a stop loss at $3.01.
November Soybeans – Soybeans are moving to the right of the descending centerline. This shows the market is beginning to strengthen, even as it is drifting lower. So we need to be cautious of any short positions at this time. Tuesday's one-day rally to the upper parallel line was caused by a weather scare. Since then, Soybeans have moved lower, due to improving weather forecasts. However, Soybeans have moved into the 60% buy window and have formed a potential TR pattern with a reversal swing day due on Tuesday. All this makes the soybeans a good market to watch for a possible turnaround and buy signal. Buy Soybeans at $9.32 stop, with a protective stop under the swing low.
December Soybean meal – Soy meal has completed a 5-wave continuation pattern and is currently in the last stage of a bullish TR swing pattern. The meal did dip to the lower levels of the 60% buy window and below the lower parallel action line, but managed to close above the line. The market needs to show some separation from the action line and trade above 282.50 to confirm the pattern and trigger the buy signal. Buy the Soy meal at 282.80 stop, with a stop loss at 272.10.
Reversal Dates for the week of September 21 – September 25, 2009.
Monday – Hogs, RBOB gas
Tuesday – Soybeans, Silver, S&P, Dow Jones
Wednesday – Bean oil, Eurocurrency, Cotton
Thursday – Cattle, Soy meal
*(TERMS YOU NEED TO KNOW)
(SAL=- Sloping Action Line) --(SRL =Sloping Reaction Line) --(RD = Reversal Date) -- (L= Long) --- (S= Short) -- (TC = Today's closing price)
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Swing trading and Reversal dates
Every good trading signal needs three key elements to be considered a successful swing-trading signal. Time, Price and Pattern . When these three come together, great things can happen. If you can improve your timing or price entry, it can enhance any trading method. That is what the Reversal Dates can do for you. They will identify when the market should react, and at what price level the market needs to be for this to happen. They will even tell you what the market has to do to confirm the trade. The first thing I do is, identify Time.
The Reversal Date Indicator consists of three parts. The first is Time . This is identified by the projected Reversal date and will indicate which markets are ready to react and when the reaction should occur . The most common misconception about the Reversal dates is the idea that the market must reverse on every signal date, which is not true. Instead, The Reversal Date itself helps to identify the market's reaction . A high percentage of the time, the market will reverse the current trend, but not always. A smaller percentage of the time, the market will form a “continuation pattern,” indicating the market will likely continue in the same direction as the prevailing trend. Often this will occur during a consolidation or after a very small correction.
Once the Reversal date has been identified, the next thing to do is monitor the price. If the market is making a new high/low, or if it is trading inside a buy/sell window, then the second component of a trade signal is in place. You now have Time and Price working together. For most traders, that will be enough, but the Reversal Date Indicator takes it one step further.
After extensive research into price patterns, I have identified specific price patterns, which occur during reversal timing. These patterns can be used to confirm the market reversals or market continuations . When, and only when, these three components are all working together, will there be a swing trade signal generated.
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