BS"D

Pivot Magic Trading Course
http://www.supportandresistance.com/Asher/index.html

MARKET IN REVIEW - LITE
Wednesday (04 February 2004)
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Morning session opens with a large gap down from the overnight, almost at S2.

1 = Following a brief attempt at MidW, Price Action heads down to test the S2. The tape displays a nice reversal off S2. Ample Volume (middle chart) and the "need" to close the gap, encourage us to think of the Pivot as our primary target.

A = Price Action does in fact climb (with rather odd white candles) through the MidM/S1/Low and lavender line (historical S/R that has been influencing the Price Action for a couple of days now). Second white candle closes above S1. Move profit-locking stop below S1, and sigh with relief.

2 = Just shy of the Pivot, the market appears to top out with a Double-top of white Bear Dragonflies. Notice the dramatic drop in Volume between these two peaks. The try for the Pivot is over, at least for now. Exit. 3.75 points

3 = Following the failed set of Doji tests of the S1/MidM, this lower high (and lower Volume) imply downward pressure. The DT Double-top itself, however, is still mid-air and not even up for consideration as a Signal.

4 = Similarly, this double topped pair of DT Double-tops are yet lower highs, again implying downward pressure, but without Volume.

5 = As the big boys return from lunch, the tape displays another lower high. This time the pattern completes within our placement range, beyond the S1. We need to wait to see if Price Action will clear proven Support at the MidM.

Price Action plunges through the lavender line and S1/Low.
By the way, see the 30-Minute chart below. This lavender line has been acting as a price fulcrum of pivotal importance for quite some time now.

6 = Now here's an entry. Take a look at the Volume chart. There's our Doji Sandwich pattern. Hah! Shows up better in the Volume bars then in the candlesticks. Any way you look at this DT triple-top test of S1, Support-turned-Resistance, we enter only as it clears MidM, which it does with powerful Volume (red bars, middle chart).

B = This second close below the MidM is so gigantic that it clears S2 and spikes to/though S3. Aggressively, move profit-locking stop above S2 - that's a lot to leave on the table!

Although there is no rule in our book, risk-aversion would have suggested to jump as soon as Price moved back above S3, (or even as Price action first arrived at that PL!) Being, of course, very careful to kill any open stop orders!

7 = For those who weren't brisk enough to jump of at S3, here's our Exit. 4.5+ points

This is real close to a J-hook Reversal Signal. So, why didn't we reverse?

The S2 is square in our path. To make things worse, immediately after the reversal bar (green = 7, middle chart), Volume dropped way off. Thus, S2 is a serious obstacle.

Even should Price Action punch through S2, as often as S/R at the MidM was proven today, that PL becomes our primary target. Let's look at the Price Window. By the time we would enter it is a tad small.

Now look from top down. How will we judge a reversal hit once we get to the MidM?
C = This red Bear Dragonfly would possibly have been the soonest we'd be sure that this was a reversal and not a pause. (If) in such a trade, it is imperative to jump as soon as Price Action approaches the target PL. (Remember, the 3:00 and 3:30 Reversal Time Zones and the EOD hiccup!)
So then, how much profit is left in this trade, even should it clear S2? Compare that with all the likely places it could go wrong.

PERSPECTIVE
Sorry my time has run out. Take a minute to examine the bottom two charts, Daily and Weekly.

Daily
We haven't had a decent retracement breather in a long time. Looks like one may be brewing. Fibonacci target levels marked with light green tags.

Weekly
D = Downward Doji's and Dragonflies. Need I say more? It's been a long time coming. Week's better than half over, is this it?

Asher
=] ;-)>

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