Pure Price Action: Predicting the Current Move

In another thread, I said that this trend was easy to see coming. Here, I'll explain that. Now, I'm not saying I knew this big move UP was coming, but I knew a move was coming period. This might seem elementary to most of you but we do have some newbies on the board so I figured I might throw some charts up.

EDIT: Sorry if my trendlines are sloppy. I was in a hurry and the accuracy really isn't needed to prove my point.

Ok, this is a weekly chart of Cable. Notice how our range has been steadily decreasing. Markets are like a spring. When they compress like this, it's only a matter of time until they pop back out, and the more compression the larger the move, or so it seems to me.

Now let's zoom down to the daily. Look at the compression. It just kept narrowing down and down and down. Tighter and tighter. Ever seen a big cat before it runs or jumps? It crouches down and it's body compresses and bunches up. This is similar to that. People want to make money, and this was frustrating to traders. When that happens, when the market does move people are going to jump in and try to get their piece. This powers the move. Common sense, right?

Notice how I'm not using any formation names. This is because I think too many people get hung up on all that and it prevents them from relating the price action back to the actions of the market participants and thus inhibits true awareness of what is going on. I think it was Vegas that said people never just listen to price, and that is very true.

Hope+Fear are blend together here.

That and impatience, greed, and indecision. Look at the move on the daily. Notice how it's in two legs. The first three days, then a period of indecision, and a greater move. I THINK that basically the market woke up and went, "holy sh*t, it went somewhere. It picked a direction!" and jumped on. Self-fulfilling prophecy at its finest.

That was outstanding explanation of Tech Analysis. You nailed it.

Scott

Very Good Far from Average. I like your style.

Very Good Far from Average or Very Good = Far from Average

hmm you put it in a double bluemonkey.

Enson AS

the link above is a nice tutorial by linda raschke which goes right into this...basic stuff for newcomers

Well, I posted this because many people seemed to get caught by surprise when this trend began. If you looked at the way price was behaving you'd have known to piggyback on the trend or get the hell out of its way.

The markets are like a heart beating, you have systole and diastole. Accumulation and distribution. In those charts, the heart was expanding, filling with blood. We just experienced the pumping of that blood. Eventually, it'll pool like that again.