Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Market Timing Coffee

Figure # 2.13 - After a sharp rally, the December 2004 Coffee peaked with a high closing price at 9030 on May 28. This high was quickly confirmed as a high pivot when the futures market pulled back to establish a low on June 7, followed by a three-day rally into June 10.  The June 7 pivot low was the beginning of a new Market timing Reaction swing and the June 10 high was the end of the Market timing Reaction swing. This Market timing Reaction swing also completed a major TR-1 pattern and indicated the end of the upward trend and the beginning of a new downward trend.

Since the June 10 high peaked inside the sell window a sell order should be placed underneath the low of the June 10 Signal bar. The sell trigger price was hit the following day, when the futures market traded below the Signal day’s low and closed below the (C) low. A soon as the 87.80 trigger price was elected, a protective stop was placed above the high of the June 10 price bar (D). The reverse/forward count from the (C) low back the pivot high (A) high equaled 19 days. (This TR-1 pattern is slightly different from others we have looked at so far, but it is treated the same.) The forward count from the (D) projected a future swing trade date of July 9.

The December Coffee plunged over 1,400 points in 19 days, before posting a low pivot on July 9…the swing trade date predicted almost three weeks earlier!

coffee chart1
Figure # 2.13 – December 2004 Coffee

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**THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES.

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