Modulación SPWM basada en circuito integrado NE 555. Simulación de

The market is only a medium for transactions between buyers and sellers. Why they buy and why they sell comes down to many different reasons. Nevertheless whatever these might be, the market goes up and down as a result.

If you are to succeed in this business you have to act on what you actually see them doing rather than forecast what they might do.

There are times when the forecast is easy to read but these times only become odds on possibilities when the market signals all fall together and the news agrees with them.

At all other times the market is not as certain as you might think unless you can recognize the activities of the “smart money”, their commitment to the current trend and the SUPPORT & RESISTANCE levels that lie in its path.

Fortunately for us we have a methodology and an abundance of tools we can use to prepare for every new trading session.

GEOMETRIC LEVELS of EXISTING SWING RANGES:

1. Old tops and old bottoms.

2. The 50% retrace level of a range.

3. The 61.8% retrace level of a range.

4. The 38.2% and 78.6% retrace level of a range.

Geometric levels of a range become focus points for traders to buy and sell off depending on the strength of the market action at the time. The 50% and the 61.8 levels are very common levels where you can get intraday reversals in swing action, the 38.2 and the 78.6 tend to occur more often in the larger swing ranges.

To make a complete analysis of the market position you should VISUALLY subdivide the progress of the market into waves of similar DEGREES of TREND.

1. Minor degree. (made up of small and smaller degree) 2. Medium degree.

3. Major degree. (made up of large and larger degree)

Geometric Levels 38 Chapter 7.

The market can be doing several things at any particular time:

1. It could be heading in the one direction in a fast and furious manner.

2. It could be trading sideways looking for a reason to keep going in the same direction.

3. It could be searching for a resistance or support level where it can reverse direction back the other way.

The wave degree in which the market is moving is most important when you are looking at retrace levels which could reverse the price direction.

In the early stages of a new trend the corrections will generally retrace most of the early advances before it develops a reliable momentum. As a trend matures, the corrections will reduce in amplitude. Therefore the maximum to expect will be generally 50% of the smaller ranges and 38.2% of the larger ranges.

One rule of thumb I adopt to subdivide trends into degrees of activity is to look at the amplitude of the prior corrections. The corrections will either be getting less if the trend is impulsive or they will be getting larger when the directional influences are not so strong. The market trend has to be considered to be reversing when the prior corrections of medium degree overbalance – that is become greater than they were in the previous MEDIUM DEGREE price sequences. The MAJOR DEGREE trend confirms a reversal when the amplitude of the prior major correction is exceeded. Usually by this time every trend indicator you have will be telling you the same story.

I’ll give you some examples:

Looking from left to right you can see how my diagram in the first frame has the chart going UP – the 1^st sign of a change in wave degree is when the downward move at the end of the chart exceeds the length of the prior corrections on the way UP. The second sign of a reversal is when the new down thrust breaks back below the last pivot high on the way UP. The third sign, and more convincing, is when the down move breaks below the last pivot low on the way up. The final confirmation comes when the down move breaks under 50% of the total points gained in the trend UP.

Geometric Levels 39 Chapter 7.

Frame two shows the same thing in reverse.

Frame three shows a consistent UP sequence that is not breaking the 1:1 correction rules.

Frame four shows a consistent DOWN sequence that is not breaking the 1:1 correction rules.

By following the 1:1 CORRECTION RULES your perspective of the trend in progress remains lucid and you can see in which direction to trade is the most favorable one.

These are the guidelines I follow religiously as it does not matter what the market does. At all times it is telling me the most favorable direction to trade in.

Now you should have a gist on how to read the market direction:

Once you get this idea in your head you can move onto selecting the retrace levels that become important in the medium degree waves.

I am only illustrating the bullish case in this example of retrace levels to give you a guide as to where the “smart money” will consider potential support returning to the market.

Now the real advantage in knowing this is when any of these cases coincide at the same level.

For instance if:

1. The 1:1 came together at a 50 or 61.8 retrace, it would certainly attract everyone’s attention.

2. Then if the 1:1 came together with a previous medium degree price pivot, that would also get their attention.

3. If a 50 retrace came together with a previous medium degree price pivot that would also get their attention.

Individually the only one that is important in its own right is the 1^st case of a 1:1 reversal.

Geometric Levels 40 Chapter 7.