Currency Market - Deutschmark Highlight #3

Long position signaled in the Deutschmark the day before the July 9th successful retest of early-year lows and prior to sharp rally.

(COMMENT #s  498, 499, 502, 503, 504)

UPDATED 19980708

COMMENT 1998-498

1. Now let's turn to page 298 in "The 1998 $upertrader's Almanac - 2nd Half Edition".

2. Look at that long term seasonal tendency the rest of the year.

3. We're down here near the lows of the year in this market.

4. But look at that monthly "Inversion Cycle Index" on page 339 of "The 1998-99 $upertrader's Book of Linear Time Cycles".

5. Now turn to page 341 where we see the same in the weekly index (they're the "dotted" lines and only become significant when they peak - on their own, they suggest that either a "high" or "low" will form, but not which, nor do they suggest trend).

6. This "monthly/weekly" "Inversion Cycle" ALIGNMENT actually occurs at the end of the month as can be seen on page 153 (use the July markets for the "MIC" and not the August in the listings).

7. The market's right now sitting on both its August, 1997 and April, 1998 lows.

8. Let's begin approaching this market from the long side.

9. The trading technique on pages 205-209 is appropriate for this market today and so long as Friday's low holds.

10. The stop's a long ways away, however.

11. Let's thus use something like the entry techniques shown on pages 236-237.

12. The "London Financial Times" ran an article where this country was threatening a trade war a few days ago which received absolutely zero press here in the States - suggests there's more than meets the eye here.

13. The reader should observe that trading is simply the process of identifying a number of situations such as this one that have a chance of working out quite well if the analysis is correct but which involve very little risk to capital if wrong.

UPDATED 19980708

COMMENT 1998-499

The same comments apply to the market shown on page 294 of "The 1998 $upertrader's Almanac - 2nd Half Edition" and 333 of "The 1998-99 $upertrader's Book of Linear Time Cycles".

COMMENT 1998-502

1. Let's go back to COMMENT # 498.

2. The day following this COMMENT, the market made a 5 year low.

3. Obviously, the market's now turned and rallied having bottomed on the 9th instead of the 8th.

4. The new low negated, however, the primary pattern recognition entry techniques referenced on pages 205-209 and 236-237 of "The $upertrader's Reference Manual".

5. The new low necessitated a change in strategy.

6. The information cited in COMMENT # 498 did not change.

7. The question, thus, was whether or not the new daily low was sufficiently contrary that we should alter our expectation of a major market turn.

8. Also, if our expectation of a major turn was still valid, how might we alter our strategy and gain timely entry?

9. Those who have followed these COMMENTS all year will be well aware that one tactic we have repeatedly discussed is the markets' repeated tendency to break major multi-year support levels and then turn violently upward.

10. The major lows were cited in COMMENT # 498.

11. The strategy which was appropriate was to apply the "ALMANAC VI" trading system (see page 369 of "The 1998 $upertrader's Almanac - 2nd Half Edition").

12. Can you see, under "BUY SIGNAL", # 2, that this market was entered by those applying the trading algorithm in this system the day after the multi-year low?

UPDATED 19980714

COMMENT 1998-503

1. Can you see how the same strategy applies to the companion market mentioned in COMMENT # 499.

2. This is the stronger market of the two, if for no other reason than the ability to hold the prior year's low.

3. In fact, I don't know whether or not you noticed, but this market traded up 33 trading days (FIBONACCI # = 34) from the early April low to the late May high and 33 trading days down to last Thursday's low.

4. Again, this major 3 month low was made on the 9th just 1 day after the discussion on the 8th.

UPDATED 19980714

COMMENT 1998-504

1. Have you noticed that both of these markets closed above the down trendlines discussed in COMMENT # 489 of 980701.

2. These are important market closes.

3. The problem, however, is that it's a long ways down to the low of the move.

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