050605
This showcase is a continuation of the discussion last time. One of the big secrets to using the Natal Forecast properly is to realize when it's "on" and when it's "off". Although it's usually accurate, there are times when it's very clear, and there are other times when it's a little hard to figure out whether the inverted or regular forecast is the dominant cycle in the market. Over this last week, the inverted forecast has definitely come to the front, and the fit was very easy to spot. I had been aware of the strong correlation since Tuesday, when the volatility following the rate increase fell totally into step with what the forecast had been predicting. Here's a look at how this tool had been doing the two days before today:
You can see that, while not perfect, the forecast has basically gotten all the big moves over the last two days. When you see a situation like this, it's definitely time to plan ahead to get in on the upcoming turns. When plotting the forecast out for the day, the biggest move was a rally off a wide base in the middle of the day. You can see this area on the chart below:
If we could only take one forecast trade during the day, this would have been the one to shoot for. The market has followed along as expected, and if the forecast is going to continue to hold, we need to bottom out here. The only problem is that the zone for our bottom is a bit wide. The forecast is flat here for about an hour, so it's up to us to pick the actual entry location.
Luckily for us, we have some great technical tools we can count on to do just that:
If you're familiar at all with these showcase pages, you know that I like to see multiple tools confirming the same turning point before actually taking a trade. In the case above, we've got the 9-5 Count, a blue Exhaustion Bar, and the Fractal Trend Index all telling us that this is the bottom. This is shown on the chart above by red arrows. The Fractal Trend in particular is a great tool for locating the termination points of trending moves. You can look back at the chart and see what the market did at times when the Fractal moved to a high level and then turned down. It's usually a turning point.
Of course, the nice moves always have tons of
indications lining up. If you can't find a pile of tools all telling you the
same thing at a turning point, odds are it's not going to be a clean one. Let's
take a look at time and price using the Fibonacci Vortex:
This vortex pattern was sized and placed using the turning points at A, B, and the high of the day. You can see that it pinpointed that first low very precisely using the blue spiral. It's actually much stronger than it looks on this chart. You could have been able to forecast that this was a turning point to the bar and to the tick using some of the time and price techniques described in the Fibonacci Vortex Handbook (available in the bookstore!). I won't go into that now, but I wanted to point this example out for students of that manual. And yes, that's a blatant plug for the book, and no, I'm not embarrassed to slip it in like that... ;-)
Here's what happened next:
This wasn't the bottom of the day, but it was definitely a money maker. The same timing tools got you out in plenty of time to pocket a nice chunk for today, and if you were paying attention, they would have also gotten you short for the drop into the close. But that's for another showcase..!
All for now! Happy Trading!