Monday, 12 September 2011

Sitting Tight

"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!" - Jesse Livermore

You don't win any prizes for guessing what position I am sitting tight on. Short EUR/USD.  I haven't posted any charts of the market in question so far today, and I won't be looking at it very closely going forward. All in the name of helping myself sit tight. My stop and target are set, profits are already locked in, and if it goes my way I'll review my stop and target once a week.

The above is not a recommendation, forecast, or brag. Simply a record of what I am thinking, and an explanation of why (hopefully) you won't be seeing many EUR/USD charts here for some months.

Aussie ASX SPI 200 trend channel projects target of 2500

Weekly candlestick chart shown below, including after hours trade. Log scale. Some markets show the best fitting trend channels on log scale charts, some on arithmetic. Log scale fits the ASX 200 long term charts better than arithmetic scale.

Trend channels were very popular during the bull market as a tool for projecting targets. They also be applied in a bear market.

The trend channel drawn from the beginning of the bear market in 2007, projects a target for the ASX 200 of around 2500. The target trend channel line is the lowest line shown below. If the market takes a while to reach that target line (ie. years rather than months), it will be projecting a much lower target at that time. The nearby parallel trend line may act as a resting point, likely temporary support.

AUD/USD plays catchup

Daily candlestick chart shown below, with a trend channel indicating a target of mid-90s. It's too early to be confident that the market will reach the target trend channel line, but it's certainly possible.