 Market Forecasting - Fact or FictionPublished Date: 2008-05-08 14:56:22 WorkOnInternet.com
All Charts for this Article can be found at http://www.esignallearning.com/education/marketmaster/archive/2008/archive_index.asp?date=042508 As you will notice on Figure 1, we have a March 08 corn chart. Please take a look at the lines on the chart. You will see gold, blue and violet lines. Each line has been drawn off the low of October 2, 2007. The gold line is drawn at 30 degrees off the low, the blue at 45 degrees off the low and the violet at 60 degrees off the low. Figure 1: March 08 Corn Chart, the Bullish Perspective Why did I choose these angles, you ask? Well, the short answer is that the earth's equator is at zero degrees latitude. Each successive line north or south of the equator increases by 15 degrees. Therefore, you would have angles of 0, 15, 30, 45, 60 and 90 degrees, respectively. One day, while looking at this phenomenon, I decided to see if I could apply it to trading, and, presto, there it was -- a way to do exactly that! As you continue to view Figure 1, you will notice black horizontal lines that intersect the lines by angles of 30, 45 and 60 degrees. Notice that, where the black horizontal lines intersect at points 1 through 6, the market reverses. I simply took the swing highs designated by the letter S on the chart and drew a horizontal line off the top of each one until it intersected each line by an angle in the future. As you can see, the market reversed at points 1 - 6. I want to caution everyone at this point. This method is not perfect nor does it work 100 percent of the time. Plus, the fact that it is a mechanical method (because you have to draw lines on your chart) can also cause some error. All I did was place a 99 cent protractor (while a daily chart was open on my flat screen monitor) up against the screen and used the Trend Line feature in my eSignal application. I then drew lines at specific angles of 30, 45 and 60 degrees off the low of October 8, 2007. Figure 2 is the same concept from a bearish perspective. This time, I drew trend lines off the top of June 18, 2007 at angles of 75, 60 and 45 degrees. In this example, I used swing lows to draw the back horizontal lines that intersect future lines by angles. Once again, at points of intersection 1 - 8, you will find market reversals. Figure 2: March 08 Corn Chart, the Bearish Perspective Life is about possibilities, and, the more you have to choose from, the better off you will be, especially in the trading arena. Paper trade this simple technique, and you will discover just how practical it really is . *Reprinted (and modified) with permission from Vincent Troncone. http://www.pennies-from-heaven.us. info@pennies-from-heaven.us. Futures and options trading involve high risk, and you can lose a lot of money. When investing in futures, you may lose more than your original investment. When purchasing options, you may lose all of the money you invested. According to many experts, most individual investors who trade commodity futures or options lose money. There is a substantial risk of loss in trading futures and options. Do not risk money you cannot afford to lose. Past results are not necessarily indicative of future results. There is no guarantee that the information in this article will generate profits for the reader. All charts are provided by FutureSource, a product of eSignal.
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