Aaron
Lynch 		Over the last three articles I have focused on RIO as a solid share on which to perform analysis. You might be thinking how many more articles I will devote to RIO, but rest assured this will be the last for a while. The Safety in the Market methodologies and Gann analysis in general I believe work very well on this particular share. So, if you are searching for a market upon which to start paper trading to cement your understanding, this just might be what you are looking for.

To recap we looked at the swing ranges and the harmonies that they can create, and finally last week we looked at the Tubbs Swing tools in the Starter Pack software to cover the idea of pressure points clustering. The pressure points are key tools of traders using price analysis. The repeating of ranges in market and the percentages of, for example 25%, 50% and 75% form areas to look for support and resistance. In last’s weeks article we used the Tubbs tool to project price points and looked for clustering of these important levels. This analysis style picked up the recent July lows. Let’s now focus on using the Tubbs tool to identify areas of resistance in the current bull run.

The chart below numbers the ranges that we are focusing on. Keeping in mind that when looking for the upside targets using the software we need to calculate the ranges from high to low. This will swing the Tubbs tool upwards. Focusing on the last three major ranges down we see all three ranges project price points up, we see a clustering occur where the 50% point on range 1 to 2, meets with the 50% point in range 3 to 4 and finally the 75% point on range 5 to 6.


click chart for more detail

Running along these horizontal lines note point A. At point A the market has found some resistance around the pressure points we have drawn. The close and the open of the 4/9/2003 are close to being exactly on the pressure points that our analysis has signalled as areas to watch for resistance. RIO on the 5/9/03 moved sharply lower, this clustering of pressure points may yet hold as a difficult point for RIO to overcome. That being said it may move past this cluster, if this occurs we can be watching the next cluster that is highlighted at around $36.00 as the next area to watch. This price coincidentally is also a previous high from March 2001 and if RIO did hold at this price we could also say that this was a double top formation.


click chart for more detail

The concept of price forecasting will not always yield 100% accuracy, however, it starts me thinking as to where a particular market may pull up and I can start to look for a possible change in trend. I have an analogy that explains the reason why I find these tools important. “How do you know when you have got somewhere, if you don’t know where you are going”. Having a price forecast in markets provides a road map to keep your attention focused on the where the next highs or lows may come in.

Good Trading

Aaron Lynch