Dr. Alan Andrews stated that when a median line (the white center line) is drawn, from the most recent swings,Â the price should return to the medain lineÂ 80% of the time. This median line can be used as a target objectiveÂ where the market will often form a new pivot. October Cattle first tested theÂ median lineÂ Â on July 21 when it traded to a high of 95.02. After a second test, on the followingÂ day, Cattle reversed, forming a high pivotÂ and droppedÂ to the 20-day EMA, trading as low as 93.25 on July 29. So far,Â the market had beenÂ following price behavior described by Dr. Alan Andrews.
He also stated that when a price returns to the median line the price will often form several small swings around the median lineÂ where it will touch or cross the line more than once before moving on.Â OctoberÂ CattleÂ tested the median line for the second time on AugustÂ 2 and crossedÂ above the line on August 4, only to back off and drop below the line on August 10.Â So far,Â so good.Â The market is behaving according to the plan. But, this is where it gets interesting. Â Each time Cattle crossed above the ascending median line, the market would pull back and close near the median.Â It was not until August 18 when CattleÂ posted a strong close with good separation from the median line. This was another Â "market tell" that CattleÂ are ready toÂ resume the upward trend with a new target objective at the upper parallel line. Remember, price willÂ continue to move towards the nearest line 80% of the line. In this case the upper parallel line is the new objective.
Understanding market behavior can and will alert you to trading opportunities andÂ allow you to be aware if the market is behaving correctlyÂ so you can take advantageÂ of this behavior.Â It is all between the lines.Â Learn more about using 'action-reaction"Â lines and swing trading strategies at www.tradersnetwork.com.
By John Crane
The February Hogs have been in a strong upward trend since early August, but that may be coming to an end. The market appears to be in the final stages ofÂ a complete cycle and overdue for a corrective move. Hogs posted a short-term low on the 12/11 reversal date before trading up to the sloping reaction line target objective. The market is in the final stages of forming a possible TR swing pattern. (A TR swing pattern typically forms at major turning points in the market.) I will give the market another day to see if a confirming pattern forms. Keep in touch with the TMV Swing Trade report for further updates.
Feb Lean Hogs completed the bullish reaction cycle and have began a trend shift.Â The cycle began with the TR pattern on August 19 and ended with a high pivot on the projected reversal swing date of November 2, 2009, where Hogs had reached the reaction line target objective in conjunction with the projected reversal swing date.Â The market turned at the confluence of Time and Price and declined to the lower parallel line where it is currently forming the last stage of a bearish TR swing pattern. A trade below the (C) pivot low will confirm the swing pattern and the longer-term TR pattern. This would mark the beginning of a new downward trend.
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December Gold â€“ Gold found support where the prior swing high and the upward trending parallel crossed at $1027.00. A two-bar double bottom provided a support for the reversal and subsequent rally. Gold surged higher on Tuesday, after news that the International Monetary Fund had sold 200 tons of gold to the Reserve Bank of India for $6.7 billion. After closing over $33.00 higher on the day,Â Gold may be a little overextended for the short-term and could hit resistance at $10.95.00 level.
December Lean Hogs â€“ Long from 54.30 â€“ last price @ 57.07â€“ Lean Hogs continued to rally today as the Chinese officials agreed to end their ban on imports of U.S. pork. The ban was created six months ago in response to the outbreak of the H1N1 virus and was lifted after Chinese health officials finally agreed that eating properly cooked pork will not give you H1N1. - Hold the long position and move the stop loss to 55.55 with a target objective of 58.50.
December Lean Hogs â€“ Long from 54.30 â€“ last price @ 55.42 - Hogs surged to a new three-month high as it confirms a new reaction swing pattern.Â â€“ Hold the long position with the stop loss at 53.25.
December Hogs â€“ Now that the Swine flu has been changed to H1N1, it is safe to go back into the Lean Hog market. But seriously, the market has formed an A-B-C continuation pattern over the past three weeks. This type of pattern typically appears in the center of a longer-term reaction cycle. In this case, the pattern projects a price move to the 5600 to 5700 price range. Â Â Buy Hogs on a pullback to 48.35, with a stop loss at 47.25.