Currency Market - Deutschmark Highlight #5

Currencies expected to next experience an "upside explosion".

(COMMENT # 698, 720)

UPDATED 19980924

COMMENT 1998-698

1. In the currencies, traders should be VERY sensitive to another large surge to the upside.

2. Simply apply the PATTERN shown in the preceding chart, but on a larger scale.

2. VERY close stops are the order of the day, however, for this move needs to get legs IMMEDIATELY if it is to work.

UPDATED 19981001

COMMENT 1998-720

1. As repeated throughout these COMMENTS this year, the process we've been using is incredibly simple:

A. Turn the pages of the books,

B. Identify ALIGNMENTS, and

C. Make the market FORCE us into a position through use of PATTERN RECOGNITION.

2. One of the PATTERNS we've repeatedly used is shown on pages 205-9 of "The $upertrader's Reference Manual".

3. There are, of course, many others.

4. As examples:

A. The trading technique presented on pages 94-101 of "The $upertrader's Reference Manual",

B. The techniques presented on pages 236-7 of "The $upertrader's Reference Manual",

C. The "Thrust" techniques presented on pages 115-6 of "The $upertrader's Reference Manual", and

D. The techniques presented in "The 10-N-1 S&P Daytrading System" discussed in COMMENT #s 384 on 980509 and 587 on 980818.

5. The ALMANAC I through VI trading systems presented in the last 6 "Almanacs" would also qualify, of course, were only the pure PATTERN RECOGNITION entry component to be applied.

6. And we've still only scratched the surface.

7. Such a PATTERN RECOGNITION technique as that presented on pages 205-9 can be incredibly productive.

8. It's used in four primary situations, as seen in the following examples;

A. To provide low risk entry into a market as we've highlighted in these COMMENTS recently in such markets as stock indexes DJI, DJT, SPZ, VLZ, NYZ, RTZ, and DJZ early this week and just prior to the current break,

B. To provide liquidation and reversal of a current market position as has been experienced in the wheat complex as highlighted in COMMENT # 713 of 980929, the CRB Index, soybeans or the energy complex as seen in COMMENT # 712 of 980929 just prior to the current break this week in these markets,

C. To provide protection from entry in a market which is believed to be primed for a turn but which expectation simply does not work out as was seen in the bond market earlier this week in COMMENT # 704 of 980927, or

D. To maintain a position in a market which is believed to be primed for a turn which simply does not occur as was seen the last couple of days in such markets as the SFZ and DMZ this week as discussed in COMMENT # 710 of 980929.

9. One should further note the switch from the PATTERN on pages 205-9 in "The $upertrader's Reference Manual" to the PATTERNS on pages 236-7 in the bonds on 980930 in COMMENT # 718.

10. This latter entry technique, although SET UP, also did not provide short sale entry, just like the PATTERN on pages 205-9 in "The $upertrader's Reference Manual" did not.

11. Hence, although the upside move was missed in the bonds, the short position was prevented by use of these techniques.

12. This in spite of the SET UP in COMMENT # 704 of 980927 being, in my opinion, CLASSICAL and one of the top ten of all time.

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