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You’ve Gotta Love Seven
Welcome from me to all our Safety in the Market traders to this month’s dedicated newsletter. I’ve just got back from the Adelaide Interactive Trading Workshop yesterday that was conducted with my mate Tim Walker. It is the second one in a row for us and really gave us a chance to build upon the current market action we had been following for the past couple of weeks. It’s personally given my stock CFD trading a boost as we have come across so many great set-ups that were just too good to pass up. I want to share a potential beauty with you on Seven Network (SEV).
At the Interactive Trading Workshop we have two big focus points when it comes to better analysing the overall market for trades. The first is to learn how to pick the very best ABC trades. The second is to learn how to analyse price and see where a trade is in the bigger picture, essentially price forecasting and position of the market.
SEV has just made potentially a great double bottom. What makes the double bottom great is where we discovered it is setting in the bigger picture. This is a great example of a set-up I found for the clients after having done back to back Interactive Trading Workshops. Chart 1 is the monthly bar chart of SEV taking into perspective the bear market from 2000 to 2003, the bull market from 2003 to 2007 and the subsequent falls in the latest bear market.
Chart 1 – Seven Network (SEV) Monthly Bar Chart – 200% Previous Bear Market Range
click chart to enlarge
As you can see by studying Chart 1 closely I have marked, using the ABC Pressure Points Tool in ProfitSource, the previous bear market range (March 2000 – March 2003) as A to B. Using the tool I can then project that range down from the latest bull market high in September 2007. To keep it simple I have removed the other pressure points and only left the 200%. The latest bear market is basically spot-on 200% of the previous which is a very strong pressure point for a change in trend. I love this tool and use it all the time for price forecasting work using ranges.
The 200% of the previous range is great on its own but it does get even better. Chart 2 has us taking a look at the monthly chart highlighting the latter stages of this latest bear market.
Chart 2 – Seven Network (SEV) Monthly Bar Chart – 50% Danger Zone Monthly Swings
click chart to enlarge
Looking at the last monthly swing into the low we have from August 2008 ($8.72) into the final low of November 2008 ($5.01). Again using the ABC Pressure Points Tool and projecting the range down from the January 2009 top you can see the latest double bottom is forming right on the 50% Danger Zone. It in fact looks like it may be doing the classic test and re-test of the 50% Danger Zone which is perfect if there is to be an ambush of Point C as displayed here.
Just yesterday (11 June) SEV went down during class to double bottom exactly with the February low and then kicked up more than 6% for the day on far greater than average volume. I will leave it to you to check out the daily bar chart, but you will discover it was a great outside reversal day on very solid volume.
The safest way to trade big double bottom like this is to use a first higher swing bottom strategy on either the daily or the weekly chart. For those that were on the ball with this trade you could have entered on 11 June (the day of the second low) as it took out the high of 10 June. All this being said should prices break south again and these lows are broken, then SEV could go much lower. I know where my money is for now and I think we have the potential for a great set-up here to profit handsomely on the upside using our rules. I definitely like to looks of this set-up and have the fact I was running the workshop to thank for finding it.
The time at the Interactive Trading Workshop passes quite quickly and I’m sure many of the clients just wish they could continue to trade and analyse with us every day following the event. It truly is a unique experience and we just never know what the market is going to present to us. One thing that I can highly recommend is Aaron’s Advanced Trader Coaching for those thirsting for more after having been to the Interactive Trading Workshop. This is 10 week of studying with a someone who is not only a great trader but is also an excellent educator and 10 weeks trading with Aaron is something any one serious about more actively trading more professionally should consider.
Until next TIME...
Noel Campbell
Professional Derivatives Trader
P.S. Koshy probably isn’t going to tell you to buy Seven in the mornings only the chart!
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