PIVOT LESSON 1

• THIS IS YOUR KEY FOR INTERPRETING THE NOTATIONS ON THE CHART. I WILL BE REFERRING TO THIS CHRT FOR THE NEXT FEW DAYS.
  
  S= SWING BAR
  
  ARROW= SIGNAL BAR
  
  RED NUMBER= PIVOT NUMBER
  
  YELLOW NUMBER= CORROSPONDS WITH RED NUMBER (Profit target)
  
  
  WHY I STARTED THE COUNT HERE
  WHY I ENDED WITH PIVOT 9
  WHY I DIDN’T INCLUDE THE LOW AFTER PIVOT 6 IN THE COUNT
  

A. WHY I STARTED THE COUNT HERE

I started the count here because I had to start somewhere didn’t I? Just kidding…If you are going to trade with the trend then you first have to be able to identify if the trend is up or down.

In the case of our chart I started here because, as I stated in the chart-reading 101 post, it is where the prior down-trend ended and the current up-trend began. How do we know this is the transition point? Because when we look at pivot number 2 on the chart we see that it is a higher pivot than pivot 1. Translation, the first higher pivot after a series of lower pivots equals change in trend from down to up.

For more clarification see page 26 of L/C.M. under the heading- FIRST HIGHER BOTTOM-FIRST LOWER TOP. This is otherwise known as trend failure. When the down-trend failed to print a lower pivot than pivot 1 that means the downtrend has failed and an up-trend has begun.

B. WHY I ENDED WITH PIVOT 9.

Because, pivot 9 is the most recent bullish pivot in the current up-trend. If we are to trade with the trend we only need to concern ourselves with bull pivots in the current up-trend.

C. WHY I DIDN’T INCLUDE THE LOW AFTER PIVOT 6 IN THE
COUNT

Simple… because I missed that one. So we can add 1 more pivot to the count and make it 10 pivots instead of 9. So, you can make a big deal about me missing that one or you can focus on the fact that it performed as advertised, as in profitable 10 for 10.


Now, I know you have questions but for this week I’m going to ask you to restrict your questions to the lessons at hand. I also want you to hold them until the end of the week and then if you still have those questions I will be more than happy to answer. Or, you can send me your questions but instead of answering it directly I will weave the answer into the lessons as we go forward. Then, again, if it is still not clear to you, let me know on Saturday and I will clarify the answer on a more personal level. The second option may be better because it may insure that I don’t miss something as I progress the lessons. That is how I realized I missed a pivot because one of my observant students notified me of this today. That allowed me to weave that into today’s post so instead of helping one it helps all.

Don’t get me wrong, it’s not as if I’m avoiding your questions it’s just that I’m trying to present the material in a more organized format and I believe this step by step approach will be more beneficial and less confusing to the majority as it will avoid jumping around from point to point, as well as providing an organized frame of reference if I have to go back and clarify a point for you on a more individualized level later.

In the next post we will take a couple of more steps and I’m sure at least some of the questions you have now will be covered.

This has been the setup phase for our future discussions. If you feel this format is unsuitable for you let me know and I'll try to think of a way that we can improve upon it. Remember, nothing is absolute, everything is probability.

NOTE: One of my students has posted a comment on the post prior to this one. I think you should go down and click on the comments button there to see what he has to say as it was not just meant for me but for you also.

Cheers, Jerry

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