MONTHLY SUPPORT/RESISTANCE
Can you see all the long traders trying to figure out what hit them right now. I mean, why is the Euro/Dollar bouncing down so hard right now. Bush is talking but he hasn't said anything that would cause this!
Well, when a man/woman is walking through a jungle should he keep his eyes fixed straight ahead while he is walking or should he be scanning for danger in all directions. In the market jungle you have to look up and down. This is just a situation that illustrates what I tell you when I say the major wave trumps the minor.
Remember in my post last week when I told you the monthly trumps the weekly, the weekly trumps the daily and so forth.
Okay, when you look at the monthly chart I have provided it is no mystery going on here. The market rose today and hit a monthly top. Traders who bought at this level two years ago have been waiting all this time to break even.
Large traders. Of course, who else can hold a losing position this long, throughout a draw down that deep. Hedge funds, banks, rich individuals.
Well, when a man/woman is walking through a jungle should he keep his eyes fixed straight ahead while he is walking or should he be scanning for danger in all directions. In the market jungle you have to look up and down. This is just a situation that illustrates what I tell you when I say the major wave trumps the minor.
Remember in my post last week when I told you the monthly trumps the weekly, the weekly trumps the daily and so forth.
Okay, when you look at the monthly chart I have provided it is no mystery going on here. The market rose today and hit a monthly top. Traders who bought at this level two years ago have been waiting all this time to break even.
Large traders. Of course, who else can hold a losing position this long, throughout a draw down that deep. Hedge funds, banks, rich individuals.
You don't even have to look at an order book to know that there are massive short positions waiting here. If you were them wouldn't you.
That's all I'm going to say about it but since it occurred it gave me an opportunity to show you what I'm talking about. And that doesn't mean the market will stay down, but you need to understand the logic that there will be at least a bounce off this long term resistance level the first time it's hit.
If you're trading off the monthly charts a bounce like this is no big deal in the scheme of things. But if you're trading off the daily or shorter a bounce like this can panic or stop you out of your position.
Don't trade with tunnel vision. These are the types of things we can focus on once we can get through the basics. I see that I can only give you small bites but I did mention it in an earlier post so it at least gives you an opportunity to see what I was talking about. It's one thing for me to tell you something but the real value is when you can see the truth in what I'm saying.
Jerry
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