TheÂ June Eurocurrency posted pivot highs of the April 15 and May 3rd reversal swing dates. Both dates marked the end of the corrective bounce and triggered a bearish reversal, followed by a lower market. The euro also posted a 570 point rally, during the two session following the May 6th reversal date. Since then, the euro has dropped to a new low and reached the up-sloping reaction line target objective,on the May 19thÂ reversal date. The marketÂ has completed a full cycle, with time and price coming together on May 19th. The euro rebounded off the reaction line suggesting the downward pressure may be over soon and could set up a possible bullish reversal pattern. For undated trade signals check out theÂ TMV Swing Trade report.
The Dow futures plunged 994 points, to a low of 9840, before a short-covering rebound. The April 27th and May 3rd reversal dates identified the major highs that formed the bearish TR pattern in the Dow Jones futures that signaled the trend shift and triggered the sell.Â Â However, todayâ€™s wide range day has skewed the cycle and it will need a few days to form a new signal pattern.
Tuesdayâ€™s one-day rally stopped shortÂ by the 20- day SMA and the down-sloping reaction line.Â TheÂ yen reversed at the two levles of resistanceÂ and resumed the dominate downward trend. This should set the stage for the next swing lower into the May 6th reversal swing date.
This Coffee chart is a great example how the median line (center line) acts like a magnet toÂ attract price. How the market reacts to this line can be a very good indicator of future price action. A market that reaches the line quickly and with a wide range day will typically reverse at the line. On the other hand, a market that gradually moves toward the line in an orderly manner can penetrate the line slightly will usually trade on both sides of the line,Â forming a series of small swing patterns, before breaking inÂ direction of the origional trend andÂ move towardsÂ next parallel line. Lastly, if the market surges through the line and closes with a major part of the trading range past the median, it will usually pullback to test the median line--offering one more opportunity to enter the market--before trading towards the new parallel line target objective.Â Â Looking at theÂ Coffee chart, you can see how the the market posted a wide range day on March 18, touched the line and dropped back to the lower support line before making another run at the median line. The market is currently trading along the line making higher highs.
The last thing of importance is when the market fails to reach the median line. This price action signifies a price failure can set up a major price move in the opposite direction. All of this things offer helpful insight into market behavior and Â future market direction.
Soybeans touched the ascending median line objective on March 22. The market stopped at the median line and posted two consecutive lower closes as it pulled back to the 20-day SMA. This is a possible bullish TR pattern forming inside the prior market swing. A trade above $9.76 1/2 would confirm the pattern and trigger a price move towards the reaction line.Â It is not time to make a move on this market, but it is a good market to put on your radar.
The sell recommendation made in the March 24, issue of the Traders Market Views was triggered at 1.1019 in the overnight session. The market has contnued to trade lower under heavy pressure and has reached the descending median line target objective at 1.0879. Â This is the initial target objective and typically offers support after a wide range day. This is a good place to step out of the trade, bank the nice one-day gain and wait for a bounce to form a new reaction swing sell pattern.
June Swiss franc â€“ The Swiss franc is beginning to exhibit a show of strength on speculation that the central bank will begin relaxing a year-old policy of selling the currency to curb its strength. The market has formed a bullish reaction swing with a retest of the 20-day SMA on Monday. This is a potentially bullish â€œsetupâ€ with a trigger price at .9527. A confirmation of this reaction swing could also mark the end of the longer-term A-B-C continuation pattern and the beginning of a new bullish leg. Check the latest issue of the Traders Market Views Swing Trading report for current recommendations.
After confriming the bullish TC (trend continuation) pattern on March 2nd, the Dow Jones futures stalled at the prior pivot level and even backed up to test support at the lower parallel line. However, the bullish cycle held and propelled the Dow Jones futures past the previous high with good seperation. This keeps the bullish cycle intact with the next target objective at 10,687. To learn more above how to apply the action/reaction method to you trading check out â€œUnlocking Wealth, Secret to Market Timingâ€ or check out the youtube video at http://www.youtube.com/Tradersnetworkinc