股票期货突破技术分析(英文原版)-第20章
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the price high itself is。not always the best place to start。 Sometimes it makes。sense to truncate spikes。when the majority of closing periods。fail to record a close within the range of the spike。 To simplify the chart； add a horizontal line at the continence zones。to mark。major support targets。 The targets。in Figure 5。2 are near 56； 50； and 44。 In practice； it is。important to be aware of the width of the confluence zone and not just a single value within the target range。
A 14…period relative strength index （RSI） indicator。was。added to the bottom of Figure
5。2。 An oscillator can confirm the key pivots。 In this。chart the 14…period RSI has。two moving averages。 The averages。are calculated from the RSI； not from price。 Moving averages。serve as。support and resistance levels。for the indicator。 Points。P and Q mark。two momentum extreme lows。 Notice the character of these momentum lows。 Both form a W pattern before the market successfully。engages。in a strong advance。 Past character is。nearly always repeated in the time frame being studied。 So we know two things。from reading points P and
Q： First； this。market likes。to produce a plex W； so we need not take the reversal seriously until it does。 Second； the market does。not have such a pattern in place now。 It can further be said this。market may be oversold； but it has。not defined a final bottom。 Because the market is。at 56； the confluence zone under the market bees。the more likely target at 50。 An extension would allow a move to 44； but just under this。zone bees。the precise area at which the market should not trade if the opinion is correct that this。market will make a full retracement back。to the highs。 Knowing where the market should not go gives。us。a clearly defined risk…reward ratio。 It also clearly defines。a level at which the implications。for global rates。and equitiesuld change。 For this reason； the decline is。setting up the long…term picture in financial markets。
The confluence zone defining a price target at 50 is。of particular interest。 If you find the Elliott Wave Principle a challenge； this。approach will be invaluable to you。 Notice the swing low marked C； or the bottom of wave C of （2）。 A box is。now drawn from this。pivot low up to the confluence zone near 50。
In Figure 5。3； the box is。moved without changing its。height to project an equality move up from 50。 The box defines。a future market swing projection based on geometric proportion。 There are other geometric。proportions。that require close study。 As。an example； the 50 level also marks。the halfway or midpoint between a range from the high； marked iii； and the low； marked wave 2。 This。independent observation about a geometric。proportion does。not depend on a wave count； but it helps。us。train the eye to look。for balance and proportion within the chart。 The box high produces。a price target near 97。 Such a move would have seriousnsequences。for the strong rallies。developing since the 2002 or 2003 price lows。in global equities。
In Figure 5。3。 the RSI has。two formations。marked at points。R and S。 Point R is。subtle。 It is。the RSI 〃kiss〃 just under the crossover point where the short average crosses down through the longer…period average of RSI。 This。exact junction should always be monitored because markets。often produce strong moves。from this。internal momentum signal。 At point S； the market forms。a choppy top but breaks。down because the RSI fails。under the averages。again。 Do not look。for divergences。alone in RSI； because there is a wealth of information in the details。
Using RSI to Define Trend
In all time horizons； study the range traveled in the RSI。 Notice in Figures。5。2 and 5。3 the RSI momentum highs。challenge the 80 level。 In November of 2006； the current market data was。moving RSI toward 10。 Bull markets。track。well above the RSI 65 level； whereas。bear market rallies。will top within the 60 to 65 range for RSI。 Corrections。in bull markets。often stay above 40； but the declines。in bear markets。will break。down below the 40 level。 These range guidelines。apply to all time horizons。within a 14…period RSI。
It is。critical for the analyst to let the market show where these levels。of respect form。 As an example； one market may use 12 as。support and develop a history at this。level。 Another market or time horizon may use 39。 Allow a couple points。for the market to tell you more precisely how it wants。to operate by reading the chart from right to left closely。 More information can be found in my book Technical Analysis。for the Trading Professional （McGraw…Hill； 1999）； illustrations are included to help detect transitions。from bull to bear markets and vice versa within RSI。
In Figure 5。4； the box created in Figure 5。2 projects。an equality swing from 50； showing a price target at 97。72。 If we subdivide the box itself by the Fibonacci retracement tool； we discover the current highs。fall on the 61。8 percent ratio。 The fact that the market is respecting the internal Fibonacci ratios。within our。box bolsters。greatly the confidence that it will respect our target at 97。72。 It also confirms that we correctly。used 50 as。the midpoint of the rally。 Although this。is。a target； it does。not imply that oil will take a straight path。
The daily futures。data for crude oil are shown in Figure 5。5。 Using the same method demonstrated in the monthly data to project a rally target； we can define a midpoint for the decline developing in the daily data to project a possible bottom。 If you use Elliott Wave analysis； pick。the top of a fourth wave within wave iii down。 If you are not familiar with Elliott Wave jargon； look for the middle swing that's。the strongest。 Then draw a horizontal line across。the screen that bisects。this。strong swing into two fairly equal proportions。above and below the data range。
This。particular chart uses。a small previous。fourth wave within the decline； because that level is。further challenged in a subsequent wave 4 bounce。 Back…to…back。fourth waves。are always。critical milestones。 Repeat the steps。to draw a box from the start of the swing to the horizontal line； marking a midpoint within the decline。 Draw a second box of the same size and move it so that the top of the box is。at the midpoint line to produce an equality price swing down。 The target is。again 50。 This。is。the same target as the one derived from the monthly data taken from entirely different pivot levels。 Most assuredly； the 50 area is。extremely important。 Further subdivide the box by Fibonacci ratios。 We find the current lows are on a 61。8 percent relationship of the box height at 56。 This。is。a repeating price level that shows。we have a confidence in the price grid this。market is。defining as。support。 （Box。width has。no meaning and should not be used for time projections。） The reason these repeating levels form； at exact prices。from different internal data； is。due to harmonic。intervals。forming within the market swings。
The RSI in Figure 5。5 provides。additional value。 Momentum indicators。that have been normalized； forcing them between a range of zero and one hundred； contribute their own message about support and resistance。 Study the indicator's。performance from right to left within the chart。 In this。chart； a horizontal band has been drawn around the RSI 45 level。 The last swing up in the indicator near 45 produced the price high marked wave iv up。 RSI tested the same area in August 2006； when the marker defined wave ii up。 Often RSI movement exhibiting similar amplitude displacements will help to confirm that a wave count is。still in the same degree。 （Waves。ii and iv produced similar momentum swings。to the same 45 level in Figure 5。5。） The asterisks。show RSI used the 45 level to define support in May； June； and July 2006。 The breakdown and subsequent test and failure under this。band was。very significant in August。 When the resistance zone in RSI was。challenged and failed in October； this。offered a warning that an extension in the decline could form； allowing the target at 56。76 to be realized。 When RSI exceeds。this。hand at 45 in the daily chart； we will have confirmation that wave 3 down in the corrective decline isplete。 Wave 4 up will not exceed the midpoint at 66。63 if oil is。going to fall further toward 50 in the intermediate pictur
