GBP UPDATE FOR 5-23-2007

You can look at the chart and see that the market bounced off 3 bar resistance on the 4hr. For those who still don't understand the concept I have shown the count in red numbers on the chart.

Once again I illustrate that you do not count inside bars I have illustrated the range of bar 3 because all of the bars between bars 2 and 3 are inside bars. They are inside of bar 3, thus they are not included in the count.

Then once again this also illustrates that the difference between a valid pivot and and invalid pivot is that with an invalid pivot, price can be expected to bounce off 3bar while a valid pivot can be expected to go above 3 bar.

Since this is an invalid pivot as evidenced by the pivot bar forming on lower volume one would have assumed that 3bar resistance would stop the up move just as taught to you in LCM.

Now if you turn your attention to the internal trendline, you remember me telling you to always draw your trendlines a couple of days ago right?

Well, anyway, you can see how the trendline cuts right across the top of 3bar. Yep that's double resistance. That's why in my post today I told you I didn't expect price to go beyond 9755 and we did, in fact close below this level at 9740. This gives me a chance to emphasize that when I talk about price levels I'm usually talking about closing price. Closing price is when I make most decisions. You don't know what a man will do until his foot lands on the ground. As long as his foot is in the air his direction is not committed. When that foot lands he has committed.

For this reason I make most of my entry decisions based on the close of a bar. However, I will exit the position on a touch of my target unless indicators, such as volume warn me to exit before the target touch.

So, here's what I expect for today. I expect price to form a bullish pivot on the daily chart. This is because we closed up today on lower volume (see your Archimedes report-volume principle). This tells us the down move has stalled because of the buoyancy principle explained in THE ARCHIMEDES PRINCIPLE.

I expect price to fall and test yesterday's open around 9713 and then rise up to close above yesterdays close to form a bull pivot. This is also the area of 62% fib retracement from the intraday up swing ve experienced today. On an intraday basis, price tends to focus the 61% retracement as support/resistance.

We have 3 keys to look for to confirm the bullish undercurrents at the moment. To be confirmed as going up this market needs to close above 3bar and the trend line I spoke about above.

Then our 3rd key is the often spoken about range or spike bar. I have drawn a line (blue line) across the open or the range bar we had on 5-15. As long as price is below here that is a third layer of resistance. If we get a close above this 3 stranded layer of resistance on the hourly chart on higher volume I'll be looking for a continuation up to the top of said range bar at 9861 which also happens to be at the upper trendline so any upmove is likely to target this area.

Hopefully you've been noticing that I look for conjunctions of indicatations at a level before I consider it for support or resistance. I like to have a conjunction of 3 planets but 2 will do. Hey, a table must have at least 3 legs to stand on to be stable.

The market may be setting up for me to enter a trade today but we'll see if we get the necessary pivots to give us the entry signal.

Jerry