Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Brent Crude Oil Price Technical Update: Low Volatility Leads to High Volatility - 20th Feb 17
Trump’s Tax System Could Spark The Wave Of Self-Employment - 20th Feb 17
Here’s How to Stay Ahead of Machines and AI - 20th Feb 17
Warning Signs Of Instability In Russia - 20th Feb 17
Warning: This Energy Investment Could Wreak Havoc On Your Portfolio - 20th Feb 17
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Fiat U.S. Dollar Approaching Resistance In Middle Of Trading Range

Currencies / US Dollar Feb 21, 2013 - 10:13 AM GMT

By: Michael_Noonan

Currencies

The best thing about reading developing market activity is that it leads you to a logical conclusion, and when things are not clear, that too, is a logical conclusion, saying: No edge, stay away. Because charts are the visual form of final decisions made by all participants, we are getting the best source for collective thinking about a market's direction. What we get to do is read what message the market is sending.

It is always important to put the market into a context. Many traders are eager to "catch the next move," often based upon a myopic view of price behavior. Most who look at charts view the daily and intra day, looking for the next winner, often getting another loser. Here is a current daily:


It would seem many are interpreting current market activity as bullish, especially with an Outside Key Reversal, [OKR] day. Looks strong. Looks can be deceiving. Perhaps a look from a different perspective will add to our level of information. The weekly chart puts a larger context of which one needs to be aware.

Why is knowing about the middle of a trading range, [TR], important? The middle of anything says balance, and for a trader it offers the least amount of market information, other than from balance comes imbalance, and it can go either way. 50-50 odds are no better than a coin toss. Are those the kind of odds any trader wants? Not likely, although many accept them.

Within the broader perspective, we zoom in for a closer look at current weekly activity. The small range at the last swing high, November 2012, is the market letting us know that demand ran out and supply entered. How do we know? If demand had remained strong, the range would have extended higher. What prevents a demand range from extending higher? Supply overcoming demand. Market logic.

That becomes an important piece of price information, moving forward because we know markets are always testing and retesting support/resistance areas.

Within the TR, we see two previous rallies that failed, and current price activity is back to retest that area, again. So where the first daily chart may have seemed bullish, to some extent, the higher, more controlling time frame is telling us price is at resistance.

Taking a second look of the same daily chart, we drew in a horizontal line showing where price failed on secondary retests of the earlier November high, and current price is back for another probe. Will it succeed or fail?

We know from the weekly that price is somewhat in balance and can go either way. The daily tells us price is in a short-term rally but bumping up against previously failed areas. One thing we know for sure, money is not made in buying against resistance, and only novice traders buy at resistance, in the unproven belief that it will go higher.

These charts were printed about mid-morning during the trading session, so we have no idea where the close will be, but it will provide additional information from which a more informed determination can be made. In a resistance area, the burden is on buyers to prove themselves.

What we want to know from today's wide range bar is, are buyers going to fail again, or can they build up enough momentum to sustain their effort? Will this be an exhaustion move in an upside feint? There is initial resistance at the 81 area, and then 81.70. The market will let us know by the way in which price responds to each level. The point is to use developing market information to advantage and be in harmony with prevailing forces.


By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife