8. Anexos
8.4. Modulación PWM basada en circuito integrado NE 555 configurado como
Market resistance is a term given to levels above the market price that traders will recognize as restrictive to its upward progress. They will place profit taking orders at these levels and in many instances sellers will place new orders to go net short at them. The outcome of this is to either cause the market to reverse direction for a correction or make a complete reversal in the short term trend.
The first confirmation of a reversal comes when the market corrects greater than a prior correction in the MEDIUM DEGREE.
1. Double tops.
2. Prior swing pivot levels.
3. Retracement levels of previous ranges in divisions of 38.2, 50 and 61.8 4. 1:1 Double Drives.
5. 1:1 upward corrections in a downtrend.
6. Daily Floor Trader Pivot Levels.
We can start off with the easy ones first but when two or more of these things line up at the same level it will be more obvious to the smart money traders.
Implied Resistance 31 Chapter 5.
In cases where the market breaks up through these implied resistance levels it is demonstrating strength and will most likely move on upwards to the next implied resistance level before encountering technical selling.
When you have a market moving upwards with no obvious pivot level resistance ahead of it you use the 1:1 Double drive rule to calculate future targets for resistance. You start with the smaller degree and work on up to the MAJOR degree. Medium degree will be stronger resistance than small or smaller degree.
In the S&P you usually find the MEDIUM degree 1:1 DD is very reliable as a trading level because if you short and it does not work, then any break through confirms the uptrend and gives you the opportunity to buy again for more upside.
In an up moving market quite often the intraday high will form on a double top, a false break double top or a 1:1 double drive top. And this level could also fall on a Floor Trader Pivot level or within 1 or 2 ticks of one. Floor trader’s pivot levels are calculations based on the previous days trading range. On most days the market will contain itself between S1 and R1 or maybe extend to the S2 or R2. Once the market gets above R2 it will most likely keep going for the rest of the day.
WHEN YOU CAN IDENTIFY A SIGNIFICANT RESISTANCE LEVEL THAT WARRANTS A REVERSAL AT THE TIME:
The market may not go into a retreat immediately, it may correct a little and come back to test the high level and then begin to fall away. Nevertheless at least 50% of the time you will get a second chance to sell on the smaller degree geometry as the smaller swings will retrace 50/61.8/66.7 after the fate becomes clearer to the smart players, these movements may be up to 3 to 5 points down followed by 2-3 points up and then the selling becomes obvious. That is when you get a better opportunity to sell into the market.
If you miss the small retracement you will always have a 3rd chance to sell the break out of the 1st correction low if the market confirms it has made an important high for the day.
There are a few other things that will aid you at the time and I will show you what they are as we move forward. The point right now is to get you thinking on the right wave length as you will have to evaluate every contingency as the market unfolds. As you move forward I will be talking about volume indicators and trend indicators and how to combine them into your trading plan. These things deserve talking about in their own context so just remember that you must take them into account when the time to trade comes.
Implied Resistance 32 Chapter 5.
Just remember there won’t be anyone else there to push your buy and sell orders into your computer. You will have to do it yourself unless you team up with a sidekick and one of you work the trading platform and the other or both of you analyze what is going on together. This can be a very good idea as two heads are always better than one (if you are on the same wave length).
COMPLEX IMPLIED RESISTANCE LEVELS:
These can form in ESOTERIC GEOMETRIC relationships based on ELLIOTT WAVE THEORY. Normally to hold some weight you need to have the past 3 or 4 swings forming a recognizable pattern in geometric terms. The best way to understand the situations that occur is to review the swings in levels of similar degree.
The possible combinations are numerous and as I have previously written several chapters on these situations in my Trading to WIN course, I will include those chapters in this text towards the end for additional study.
For now it is better to stick to the simplistic methodologies that more traders will recognize easily.
On a day to day basis it is better to keep things simple and leave the other stuff for the occasions that warrant their use. Nevertheless you can see from the chart example that the wave structure in my example on page 31, at the high 1408 related in three different geometric ways.
CD=AB (1:1 DD), CD= 2.00 BC (which at the time was a 50% retrace), AD = 1.414 XA – this is harmonic geometry in the Large degree sequence (based on the square), This is more of a Gann thing than an Elliott interpretation.
Now I do not know why these things occur this way but they do! I have explored the reasons why but outside of Robert Lawler one time telling me I was on the verge of the occult and I should be careful I haven’t got a clue. But happen they do and as long as they continue to do so we can all take advantage of them. I am not religious and I am not a crank, I believe in what I see and that is all.
Point is the more I see it happen the more I believe in it.
If you want to trade my method you will have to adopt the same attitude.
Because sometimes things come together that look guilt edged and within a short time they just fly out the window. When they do it is not a problem with my approach as I always remain flexible and if something does not work I always know I can reverse and run with the flow.
The point is I do not make forecasts that convince my mind that I know exactly what will happen, I just take the obvious signals to trade and if they don’t work I get out or reverse back the other way; but I do it very quickly.
Implied Resistance 33 Chapter 5.
Implied Resistance 34 Chapter 5.
SOME OTHER POINTS TO REMEMBER:
When a market is in a declining trend it should not retrace more than 50% and at the most 61.8% of the smaller degree swing ranges. If it does the likelihood is that a range bound situation will be forming.
In a MEDIUM degree down trend a correction in the latter stages of development should not retrace more than 38.2% of the most recent medium degree swings that have been in progress for a few days. If the market reverses back down off a 38.2 MEDIUM degree correction it is more than likely it will go to new lows in the unfolding trend. More than likely the 38.2 resistance reversal will set the market up for one more down swing.
This approach can also be applied to the higher degree swing series all the way up to MAJOR swings.
I will have to retrieve a chart of the S&P 500 – SPX, to show you some significant geometry that occurred in the MAJOR SWINGS on the decline from 2000-2002. From the high there was a 50% retrace before another decline that way exceeded the previous low. From there it made a MAJOR degree 38.2 retrace of everything down from the 2000 high, the 38.2 stopped the market going any higher in early 2002 and then the SPX continued to go down lower into the latter part of 2002 before the bear market made a base to begin a new cycle upwards.
This was an amazing example of why it is so important to understand the teachings of Gann and Elliott if you want to be around in another 25 years calling yourself a successful trader.