Thank you tbone for you kind words. I apologize for the delay in responding but I have been in the process of moving and that, combined with my day job has kept me occupied for the last few days. It is the case that if you make enough projections some of them actually work out to be correct. lol
In response to your inquiry I will say that I use Elliott Wave as a base for my analysis. I know that some find it arcane, difficult to interpret or worse, just plain useless, but I have found that when a wave count can be plainly placed on a chart, it has been an effective trading tool for me. If nothing else it forces me to sit down each night and ask myself what is the current position of the market (within the context of the overall trend), where is it likely to go and, when is it likely to get there. It is also important to note that most of the big players use EW and therefore, the target points it identifies are likely to be areas where the guys with the real money are going to make some decisions about how allocate their trading capital.
Having said that, we did see a low of 1.1856 on Friday, just below where I thought we may stop before moving higher. The close on Friday was 1.1906, the high was 1.1929.
I agree with you that the daily chart is bullish and a low has probably been put in at Friday's low. My orientation is to the long side.
The weekly chart has a reversal bar, down which may indicate a bearish condition. The beginning of the week saw an open of 12045 and ended the week at 1906 . Down 139 pips (all of these quotes are cash). Is it possible that the market could take out that 1.1823 low (Feb 27/06) before moving higher, and if it does the downside should be very limited.
However, my view is that the action we are seeing is part of the bottoming process and next week's action should see the market move higher. My upside target is still 12509 to 12653 before the current corrective move is over.
The dollar was higher on Friday however it was the result of the jobs report and comments made about higher interest rates. The strength here may appear to be a mile wide but it looks very shallow to me. I agree that the funds are not yet short but they have certainly backed off their long positions and, unless and until they decide to increase their long holdings, the next move for the dollar is down. The dollar did spike and hold that 90.72 level which is key, but I not certain that the index is going to be able to hold that level into next week.
I am going to continue with the assumption that the current action is a correction to the Dec 31/04 high at 1.3670. These corrections take the form of a 3 waves two of which, A & C carry the market lower. The first Wave A which now appears to be complete at the low of Feb 27/06).
My view is that we are now in Wave B which if correct, will take us higher to the 1.2509 â 1.2653 area and, this price target will be reached in the April 7th to May 12th time period.
At that point Wave C will begin and the Euro will correct down to the 1.1000 level or a just a little above before the next major up move beings. My long range plan it to be in a position to sell into that weakness from at least the 1.2509 price level with as large a line as I am able given prudent risk management strategies.
Longer term charts suggests the dollar will correct to 80.40 before a bottom is reached.
However that is in the future and we need to trade todayâs market. For this week there are three good long entry points that offer a good risk reward ratio.
1. Long on a trade above 1929 with a stop just below Fridayâs low.
2. A safer trade is long above the March 9th high at 1.1953 with a stop placed according to your risk tolerance.
3. The safest trade is long above 1.2093, the March 6th high. There can be little doubt in my view that a trade above this level would confirm the current position of the market and it brings the upper targets of 1.2509 to 1.2653 just mentioned, into focus.
I was not in the market on Friday and only had a chance to scan a charts a couple of times during the day.
I will be taking ½ of my normal position on a trade above 1.1929. I will be entering the remainder of my positions on a trade above 1.2093. Since I do not trade the cash market this number will be adjusted for the M06 contract.
As always I appreciate any comments especially those that take a completely different view. I am willing to change my opinion on a moments notice and try never to get âmarriedâ to any one view point.
I apologize for the length of this post.
Good luck to everyone.
