A Non-trading system

Hello, in this thread i want to focus on a different trading approach,

Usually we trade the market using some kind of strategy, a trading systems, rules and knowledge that work together to let us spot entry and exit points in the market, and hopefully make some profit out of the trading activity.

And we focus very much on such trading systems, on a point where by focusing on it we miss most of the informations that market do offer on any given time.

So, instead of focus on a trading system rules-based, in this thread we're going to focus on the market, and see what happen in a given moment, without creating any judgement or rules.

It will be a very interesting experience, any reply and partecipation in the subject is welcome, I will start by analyzing the current situation of a currency pair or commodity in the next days.

In the meantime, have a nice weekend

Hello,

I wish you're having a nice weekend, and let's start..

As first thing, we have to know that market move from an extreme to another, supports and resistances.

However, not all supports and resistances have the same power, in the next chart we're going to see supports and resistance points indicated with a number, from 1 to 5.
What does it mean, basically the bigger is the number, the more strong/important is the sup-res point.
Below a little image to fastly understand this concept:

http://img219.imageshack.us/img219/1504/immagineblw.jpg
As we see, in this fancy image the market is moving up, making three "2" upmoves, and two "2" downmoves, each of those moves have inside other "1" moves.
("1" and "2" are just the numbers that show the importance of turning points).


And now, let's see a real eurusd current chart, 4h:

http://img651.imageshack.us/img651/4259/97237582.gif

As we can see, market is going from and to extreme "5" points, and looks like the overall trend is up (upwaves are bigger than downwaves).
I've also put a trendline on every wave to better see them.

So, now the price is on a down extreme, and the trendline of such downwave (from "5" top to the current "5" bottom) has been broken, and soon after such broke price is now again on the trendline, probably a retest of it.

On the other side, we know that market is currently on a "5" bottom, but such bottom can extend, we will know 100% surely that such "5" bottom is reached only when price will be at a "5" top, so we can't really be never sure about anything, untill it happen.

I've drawn also some trendline as i wrote before, such trendlines are a good help to understand the momentum and validity of a wave, usually when price isn't strong enough to keep above or below a trendline, it means that such wave is going to end soon, and price is going to move to the other extreme (this happen most of the time, but not anytime).

You can see from the image that some numbers are RED, such numbers are the not confirmed ones.

So, looking deeper..
We're now on a current-not confirmed "5" bottom, we're also on a current-non confirmed "4" top, and a current-non confirmed "2" bottom, and the trendline of the downwave from "5" top to "5" nonconfirmed bottom is broken, and price is re-testing it.

Any ideas and comments about the current situation is welcome, my personal idea is that price will probably reach a "5" top in the near future, so...

Thank you for reading


P.s. below the same image, zoomable to better see it