Noel Campbell
Noel Campbell

Welcome all Safety in the Market traders to this month’s dedicated newsletter.

Watching a diverse cross-section of markets can be both a blessing and a curse. With so much going on at the moment in equities, currency, metals and soft commodities markets, the challenge is to keep track of only what you can handle to maximise results and performance. Sometimes less can be more.

Having said that, I’m going to throw a couple more big opportunities your way and focus on two key areas of price forecasting. Students who attended the recent Interactive Trading Workshops (ITW) have an advantage here as we studied these set-ups in the class.

Firstly, let’s take a look at the DJ-SpotV ($10 Dow Jones Futures). Our Platinum Fast-Track students have already seen this chart, as I shared this with them a couple of weeks ago in their dedicated newsletter. Chart 1 shows the Lows Resistance Card for the 6 March, 2009 low of 6,460. (If you don’t know what ‘Lows Resistance Card’ is, then I’m going to make you do some homework. Go to your Number One Trading Plan manual, turn to Section 11 and look it up!) The punch-line is that the recent top in early-May is basically found by doubling the March, 2009 low price, and that’s special!

Chart 1 – Dow Jones $10 Futures – 6,460 Lows Resistance Card

click chart to enlarge

The next example is also pretty huge and focuses on the power of equal ranges. It covers something close-to-home for we Australians and relates closely to the article from last month on the potential strength in the U.S. Dollar. Chart 2 is the monthly chart of the AD-SpotV (Australian Dollar Futures). As this is a monthly chart, we are going big-picture and looking at major ranges. And in using major ranges, we may be looking at major results.

Chart 2 – Australian Dollar (Ad-SpotV) – Monthly Bar Chart, Equal Ranges

click chart to enlarge

If you have any overseas internet shopping to do, Chart 2 suggests you might like to get that sorted! That’s not investment advice and is perhaps even a little un-Australian, but the little Aussie Battler might be in for a tough time, if this chart proves correct.

Finally, I am going to touch on a trading opportunity for you to consider, on the back of the U.S. Dollar Index work I shared with you last month. Chart 3 is a split-screen chart using the ‘Teach Mode’ functionality in ProfitSource. Here we have a weekly bar and swing chart for the DX-SpotV. The retracement percentage compared to the last weekly upswing is large, but we are still looking at a first higher bottom opportunity on the weekly swing chart.

Chart 3 – U.S. Dollar Index (DX-Spot) – Weekly Bar and Swing Chart

click chart to enlarge

With the slightly lower leverage found on the DX contract, trading this contract off a weekly chart is a definite possibility. Otherwise, if the higher swing bottom is confirmed, then looking for long daily ABC trades is also on the cards.

There is more I could show on this set-up but I will leave that to you. A hint as to what to look for is the volume from A to B, compared to the volume from B to C. See if you like what you find.

I’ve probably gone further than I normally would in sharing some forward outlooks based upon the charts and our price forecasting theories. I’m guessing this is something you can handle and will forgive me!

All of these set-ups were found during my own trading and while working with students at the Interactive Trading Workshop. These seminars present tremendous opportunities for students to develop – and many grow quite dramatically during the intensive three day course – but they also help us traders and presenters get our own thoughts organised as we share our knowledge with you. It is certainly win -win.

Stay positive, work hard.

Until next month...

Noel Campbell
Professional Derivatives Trader