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Euro Double Bottom?
The Euro (EC-Spotv in Profitsource) pushed on to new highs in April, with the current All Time High coming in at 1.5985 on April 22nd. The run up into the top gave us some very nice swing trading entries, including three successful ABC Long Trades in a row. Chart 1 below shows us this move into the top.
Chart 1
click chart to enlarge
Students who were on top of their Price Forecasting work from the Number One Trading Plan would have been cautious about getting long around the 1.6000 level, and with good reason.
Chart 2 below shows that the market had reached the 100% milestone of the major weekly range from August to November 2007.
Chart 2
click chart to enlarge
When we see a top come in, we need to look to our roadmap to work out whether this is a major or minor top, and therefore decide whether we are waiting for a retracement to get long again, or whether it is time to go short. In other words, we need to decide whether this is the end of the move, or simply a brief pause while the market catches its breath.
My roadmap was looking for a final high around 1.6500 in late November, so unless the market tells me otherwise, I’m still looking for more long opportunities. May was an important date to watch for a change in trend, and so far we have seen the market double bottom, and give us a higher swing bottom.
Using the ABC Pressure Points Tool in our software, Chart 3 below shows us that the Euro has completed 133% of the downside range from the high in March.
Chart 3
click chart to enlarge
This is combining our Price Forecasting analysis with Double Bottoms.
Students who have just attended the recent round of Gann Jump Start seminars may like to practice their new found time analysis skills here to come up with the next Pressure Date to watch on this market. Using the Balancing Time technique will give you a pressure date to watch that ties in with a key Gann Seasonal Date – but I’ll let those who do the work discover this for themselves!
For those students with the Incubator, try applying David’s interpretation of Gann’s Fourth Dimension lesson to the bear run on the Euro in 2005, and see if you can relate it to the current market, in particular the current high.
Finally, I’d encourage all students to read my article on setting up a market in the recent Trading Tutors Newsletter, then apply it to this lesson. History does repeat.
In this article I’ve tried to give students at all levels some ideas to take away and apply to your own market, so it’s now up to you to do the work, and make these techniques your own.
Be Prepared!
Mathew Barnes
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