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.618 1.618Point Value Objective Points File SPM301A = 74950 COP = 77319B = 77360 OP = 78240C = 75830 XOP = 79729Copyright (c) 1996 CIS, Inc.WASH AND RINSE: A CONFIDENCE BUILDERThis pattern is more in the category of a hint or a clue than a tactic.Let's say you haveconsolidation above a DiNapoli Level but the market has refused to get in gear and moveto the upside.Then, suddenly, all stops have been cleaned up (taken out) and on a lowerTime Frame chart, you begin to get some thrust.The fact that the D-Level has beenbriefly penetrated is not of concern.There are a variety of examples showing the Wash and Rinse phenomenon in this book.Some are shown in Chapter 15.The Wash and Rinse does not have to occur at a D-Level,it's just easier to play if it does.Why does this work? The idea here is that once the market has been cleaned up, the floorhas no incentive to go lower.Another possibility is that a search of lower levels by marketparticipation has found substantial buying.A third more cynical interpretation wouldindicate that whatever entity, or trader(s) that wished to accumulate a significant positionis now satisfied (by buying the consolidation as well as the sell stops).This entity orindividual, now satisfied, has no incentive to hold the market back by acting to force aconsolidation area to be formed.In any case, all those who were stopped out, who wishto participate, must reenter at higher levels.All intraday Trend indicators start to point upand it's time to get involved.If you exited1 or were stopped out, it's time to reenter, byusing one of the entry techniques described above.1DiNapoli, "Three Period Rule," FIBONACCI MONEY MANAGEMENT AND TREND ANALYSIS inhome trading course. Chapter 13 Fibonacci Tactics 235FREQUENTLY ASKED QUESTIONS:Which technique is best? What should I use?That's up to the psychological make up of each trader.There is no single answer.Whenyou become thoroughly familiar with each tactic by observing market action and theconsequences that each action would have created, you will inherently choose one or theother.Experience in a given market situation will also tend to dictate the appropriatestrategy.Most of my trades are variations on Bushes.I use the other strategies when they seemmore appropriate.Minesweeper B seems complicated.You give up a lot before you get in, so why evenbother with it?It is more complicated but still relatively easy to employ, particularly if the context, or setup, is on longer Time Frame charts, say hourly and above.Whether or not it is costlydepends upon how much support develops on, or around the selected entry Node.Referto the Minesweeper section earlier in this chapter if you don't understand this point.Isn't the Minesweeper technique just a variation of Bushes, after you see support whereyou initially wanted to enter?Yes! I've attached a different name to this strategy and treat it differently to illustrate itsapplicability.While all the examples above are shown for long entries, they work equally well on theshort side. CHAPTERAVOIDING A TYPICAL MISTAKEGENERAL DISCUSSION:Trading requires constant and focused vigilance.The professional distinguishes himselfby making Mistakes less often than the neophyte.He cannot hope to avoid themaltogether.By studying this next example, see if you can avoid misinterpreting asituation similar to the one depicted and in so doing avoid some unnecessary losses.This example is based on monthly data, however the same thought process it imposes canbe applied to an hourly or a five minute chart.YEARLY BOND EXAMPLE:Consider the labeling of the following US bond monthly continuation chart and theaccompanying FibNodes"! printout, which shows three reaction lows and a FocusNumber of 12210. 238 DiNapoli Levels Chapter 14 Avoiding A Typical Mistake 239We will be focusing on price action in the vicinity of the.382 Primary Node to see whatwe might learn about future price Movement.However, if you had been trading bondsfrom higher levels and from a shorter Time Frame chart, it would have been reasonable toassume significant D-Level support at all of the support Nodes shown.This is because allof these Nodes were created from important monthly reactions, not from a half hour chart.If you look at the daily and weekly charts, you'll find at a minimum, respectable rallies inthe vicinity of all of these price levels.Consider how this would have helped you, even ona five minute chart!When we're analyzing whether or not a long term bull market is still intact, we look to ourtrend indicators on the weekly and monthly charts.We can also observe whether or notthe Primary '*' [ Pobierz całość w formacie PDF ]
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.618 1.618Point Value Objective Points File SPM301A = 74950 COP = 77319B = 77360 OP = 78240C = 75830 XOP = 79729Copyright (c) 1996 CIS, Inc.WASH AND RINSE: A CONFIDENCE BUILDERThis pattern is more in the category of a hint or a clue than a tactic.Let's say you haveconsolidation above a DiNapoli Level but the market has refused to get in gear and moveto the upside.Then, suddenly, all stops have been cleaned up (taken out) and on a lowerTime Frame chart, you begin to get some thrust.The fact that the D-Level has beenbriefly penetrated is not of concern.There are a variety of examples showing the Wash and Rinse phenomenon in this book.Some are shown in Chapter 15.The Wash and Rinse does not have to occur at a D-Level,it's just easier to play if it does.Why does this work? The idea here is that once the market has been cleaned up, the floorhas no incentive to go lower.Another possibility is that a search of lower levels by marketparticipation has found substantial buying.A third more cynical interpretation wouldindicate that whatever entity, or trader(s) that wished to accumulate a significant positionis now satisfied (by buying the consolidation as well as the sell stops).This entity orindividual, now satisfied, has no incentive to hold the market back by acting to force aconsolidation area to be formed.In any case, all those who were stopped out, who wishto participate, must reenter at higher levels.All intraday Trend indicators start to point upand it's time to get involved.If you exited1 or were stopped out, it's time to reenter, byusing one of the entry techniques described above.1DiNapoli, "Three Period Rule," FIBONACCI MONEY MANAGEMENT AND TREND ANALYSIS inhome trading course. Chapter 13 Fibonacci Tactics 235FREQUENTLY ASKED QUESTIONS:Which technique is best? What should I use?That's up to the psychological make up of each trader.There is no single answer.Whenyou become thoroughly familiar with each tactic by observing market action and theconsequences that each action would have created, you will inherently choose one or theother.Experience in a given market situation will also tend to dictate the appropriatestrategy.Most of my trades are variations on Bushes.I use the other strategies when they seemmore appropriate.Minesweeper B seems complicated.You give up a lot before you get in, so why evenbother with it?It is more complicated but still relatively easy to employ, particularly if the context, or setup, is on longer Time Frame charts, say hourly and above.Whether or not it is costlydepends upon how much support develops on, or around the selected entry Node.Referto the Minesweeper section earlier in this chapter if you don't understand this point.Isn't the Minesweeper technique just a variation of Bushes, after you see support whereyou initially wanted to enter?Yes! I've attached a different name to this strategy and treat it differently to illustrate itsapplicability.While all the examples above are shown for long entries, they work equally well on theshort side. CHAPTERAVOIDING A TYPICAL MISTAKEGENERAL DISCUSSION:Trading requires constant and focused vigilance.The professional distinguishes himselfby making Mistakes less often than the neophyte.He cannot hope to avoid themaltogether.By studying this next example, see if you can avoid misinterpreting asituation similar to the one depicted and in so doing avoid some unnecessary losses.This example is based on monthly data, however the same thought process it imposes canbe applied to an hourly or a five minute chart.YEARLY BOND EXAMPLE:Consider the labeling of the following US bond monthly continuation chart and theaccompanying FibNodes"! printout, which shows three reaction lows and a FocusNumber of 12210. 238 DiNapoli Levels Chapter 14 Avoiding A Typical Mistake 239We will be focusing on price action in the vicinity of the.382 Primary Node to see whatwe might learn about future price Movement.However, if you had been trading bondsfrom higher levels and from a shorter Time Frame chart, it would have been reasonable toassume significant D-Level support at all of the support Nodes shown.This is because allof these Nodes were created from important monthly reactions, not from a half hour chart.If you look at the daily and weekly charts, you'll find at a minimum, respectable rallies inthe vicinity of all of these price levels.Consider how this would have helped you, even ona five minute chart!When we're analyzing whether or not a long term bull market is still intact, we look to ourtrend indicators on the weekly and monthly charts.We can also observe whether or notthe Primary '*' [ Pobierz całość w formacie PDF ]