股票期货突破技术分析(英文原版)-第4章

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s。of　the　anticipated　next　type　of　trading　and　thus。have　a　clear　understanding　of　whether　the　pattern　is。actually　occurring。　And　if　it　is。not；　then　the　trader　knows。that　the　alternate　choice　is。occurring。　This。makes。monitoring　market　action　much　more　efficient　and　effective　because　the　checkpoints。and　checklists。to　be　watched　are　clear　and　easily　identified。　

Types　of　Trading　
In　Drummond　Geometry　there　are　only　five　types。of　trading：　
。　
Trend　

。　
Congestion　entrance　

。　
Congestion　action　

。　
Congestion　exit　

。　
Trend　reversal　


Each　type　is。clearly　defined：　trend　trading；　for　example；　describes　a　situation　in　any。given　period　when　three　successive　price　bars。close　on　the　same　side　of　the　PLdot。　Thus；　looking　at　the　market　at　any　point；　we　know　whether　that　market　is。in　a　trend　or　not。　Congestion　entrance　trading　is。characterized　by　the　following：　the　market　has。been　in　a　trend　—　that　is；　at　least　the　last　three　bars。have　closed　on　one　side　of　the　PLdot　—　but　the　next　bar　closes　on　the　opposite　side　of　the　PLdot。　In　Figure　1。1；　the　bar　marked　T。（fifth　bar　from　the　left　on　the　chart）　defines。the　start　of　a　trend　because　it　is。the　third　bar　in　a　row　that　closes。above　the　PLdot。　The　market　remains。in　a　trend　until　it　reaches。the　bar　marked　CE；　which　is。the　first　close　on　the　opposite　side　of　the　PLdot；　at　that　point；　the　market　is。in　congestion　entrance　trading。　Similar；　unambiguous。definitionsver　congestion　action；　congestion　exit；　and　trend　reversal　trading。　These　unambiguous。definitions。put　traders。in　the　driver's。seat；　because　they　can　watch　for　exactly　the　action　that　will　be　required　to　change　the　basic。orientation　or　〃state〃　of　market　action。　The　trader　can　monitor　for　precisely　those　elements。that　are　expected　to　occur。　

Multiple　Time　Period　Analysis　
The　first　two　major　elements。of　Drummond　Geometry　—　the　definition　of　future　support　and　resistance　and　the　definition　of　the　anticipated　market　state；　or　next　type　of　trading　—　give　traders。a　leg　up；　because　with　them　they　can　start　to　identify　the　potential　turning　points。at　support　and　resistance　levels。as。the　market　moves。forward。　To　these　major　elements　Drummond　Geometry。adds。the　concepts。of　“dot　push”　and　“dot　refresh”；　which　describe　movement　away　from　the　dot　and　market　movement　returning　to　the　dot；　respectively。　We　can　say　that　dots。push　trends；　support　and　resistance　areas。terminate　trends；　and　the　market　moves。from　one　type　of　trading　to　another　type　of　trading　in　a　regular；　predictable　manner。　
In　Figure　1。4；　we　can　see　how：　the　dots。push　a　strong　trend　upward　and　that　as。the　market　moves。upward；　the　dots。act　as。support　for　the　trend；　the　price　bars。close　over　the　top　of　the　envelope；　and　the　price　bars。can　break。nearby　resistance　and　move　into　the　resistance　areas。further　out。　When　the　trend　stops；　nearby　resistance　bees。strong　and　holds；　and　the　dots。start　to　move　sideways　as。the　market　churns。through　itsngestion　areas；　oscillating　between　the　nearby　support　and　resistance　areas；　which　tend　to　hold　and　not　break。　
These　are　excellent　advances；　but　they　are　still　not　enough　to　provide　a　successful；　reliable；　and　consistent　approach　to　trading。　To　ensure　success；　we　need　one　more　major　enhancement；　and　that　constitutes。the　third　leg　of　this。three…legged　stool　of　Drummond　Geometry。　
It　is。not　enough　to　know　where　support　and　resistance　lie　in　the　near　future。　We　must　also　know　whether　that　support　or　resistance　will　be　strong　or　weak。　If　it　is。strong；　it　will　hold；　causing　the　market　to　change　direction　and　turn　back；　if　it　is。weak；　it　will　break。and　give　way；　letting　the　market　proceed　farther　in　the　same　direction。　
Determining　the　relative　strength　of　support　or　resistance　is。a　bit　of　a　dilemma　because　there　is。nothing　on　the　conventional　single　time　period　chart　that　can　tell　a　trader　if　resistance　or　support　will　be　strong　or　weak。　And　yet　this。is。often　the　most　important　information　a　trader　could　have；　because　it　monly　is。the　determining　factor　in　deciding　direction。　If　a　trader　has。a　firm　handle　on　direction；　then　many　of　the　other　challenges。fall　into　place　and　steady　success。is。achievable。　So　if　there　is。nothing　that　can　be　derived　from　conventional　charting　to　provide　this。information；　it　must　e　from　another　source。　In　Drummond　Geometry；　that　source　is。the　chart　of　the　same　symbol　viewed　in　a　larger　time　resolution—a　longer　time　frame—than　the　trading　chart。　
If；　for　example；　the　market　has。been　trending　upward　in　an　hourly　chart　and　the　trader　thinks。it　may　turn　around　and　enter　congestion；　he　may　indeed　be　correct。　But　without　additional　information　there　is　no　way　to　confirm　this。suspicion　until　after　the　market　has。made　its。move。　However；　if　the　trader　places。the　hourly　chart　and　its。projected　future　support　and　resistance　within　the　matrix　of　the　daily　chart's。projected　support　and　resistance　areas；　the　context　bees。clear。　If　the　trader　can　see　that　hourly　resistance　has。reached　the　anticipated　daily　resistance　and　daily　resistance　is。anticipated　to　be　strong　based　on　the　daily's。position　within　the　weekly。and　monthly。matrix；　then　he　can　take　action　with　about　three　times。the　confidence　that　would　otherwise　be　warranted　for　this。trading　situation。　That's。a　huge　advantage。　

Figure　1。5　shows。the　same　USDJPY　Forex　monthly　chart　that　is。featured　in　the　first　four　figures；　in　which　each　bar　represents。one　month　of　market　activity。　But　a　new　element　has。been　added；　namely　the　support　and　resistance　areas。from　the　quarterly。USDJPY　chart。　These　areas。are　represented　by　the　thin　white　lines。behind　the　price　bars。　To　make　the　last　two　quarters'　support　and　resistance　areas　more　visible；　I　have　made　them　gray。blocks。　Note　how　useful　this。can　be。　Not　only　do　we　see　where　the　projected　monthly。support　and　resistance　are；　we　also　see　the　projected　quarterly　resistance　overlaying　the　monthly　chart。　With　this。information；　we　can　see　that　for　the　last　bar　of　this。chart；　which　represents。the　month　of　October　2006；　the　high　formed　above　the　month's。nearby　resistance　but　exactly　at　the　top　of　the　quarterly　resistance。　A　Drummond　Geometry　trader　looking　at　this。chart　at　the　beginning　of　October　would　have　a　strong　indication　that　selling　at　that　point　would　be　a　very　good　idea。　

Applying　Drummond　Geometry　to　a　Long…Term　Forex　Trade　
I　suggest　that　charts。from　all　time　periods。have　similar　patterns。that　occur　and　reoccur；　and　all　time　frames。are　related。　In　other　words；　a　market　top　on　an　hourly　chart　will　of　necessity　be　reflected　by　a　market　top　on　the　five…minute　chart　of　the　same　symbol。　Traders　generally　recognize　that　it　can　be　useful　to　look。at　hourly　charts。and　daily　charts。of　a　market；　although　the　techniques。of　coordinating　the　time　frames。may　not　be　widely　understood。　But　it　is。a　rare　trader　indeed　who　understands　that　the　patterns。in　long…term　charts。such　as　monthly；　quarterly；　yearly；　two…and…a…half…year；　and　five…year　charts。are　all　similar　and　can　be　profitably　included　in　the　trader’s。analysis。　
If　I　were　to　show　you　a　long…time…frame　chart　but　without　the　time　designations。on　the　horizontal　axis。or　the　price　designations。on　the　vertical　axis；　there　would　be　nothing　to　indicate　whether　you　were　looking　at　a　fifteen…minute　chart；　an　hourly　or　a　daily　chart；　or　a　weekly　or　monthly　chart。　By　now　you　can　guess。where　I'm　going　with　this：　it　could　also　be　a　quarterly　chart；　in　which　each　bar　represents　the　market　activity　in　one　quarter；　or　a　yearly。chart；　in　which　each　bar　represents。one　year's。market　activity；　or　an　even　longer…term　chart；　in　which　each　bar　represent　is。two　and　a　half　years'　activity；　or　five　years'；　or　ten。　On　each　of　these　charts；　we　can　see　trends；　congestion；　types。of　trading；　dot　pushes；　terminations；　and　so　forth。　And　on　each　chart　the　support　and　resistance　levels。can　be　projected　into　the　future。　
Why　is。this。useful？　A　moment's。reflection　will　make　that　clear。　If　we　can　project　resis…tance　and　support　on　a　yearly　basis；　then　we　have　an　advantage　in　predicting　and　monitoring　market　turns。in　those　areas。　It；　for　example；　we　can　determine　the　market's。yearly　high　or　low　in　a　major　Forex　market；　then　we　can　potentially　take　advantage　of　long…term　moves。with　immense　profits。built　into　them。　In　the　currency　markets；　with　the　eye…popping　400…to…1　leverage　available　even　to　small　traders；　very　large　profits。are　available。　
Let's。lake　a　look。at　some　charts。and　analyze　these　yearly　charts。and　their　shorter　time　frame　ponents—for　it　is。on　the　shorter　time　frames。that　we　will　first　see　the　evidence　of　the　yearly　low　or　yearly。high　setting　up　and　terminating　energy　in　support　and　resistance。　
In　the　tool　chest　of　Drummond　Geometry；　there　are　concepts。that　can　be　used　to　structure　many　different　kinds。of　trades。　I　will　detail　one　entry　signal　here　as。an　example；　so　that　we　can　follow；　a　sample　trade　on　the　long…term　chartsing　up。　In　Figure　1。6；　we　see　a　daily　chart　that　shows。what　we　call　an　〃exhaust〃　and　the　entry　signal　that　follows。it。　An　exhaust　is。a　market　move　of　very　high　energy　that　breaks　through　nearby　support　or　resistance　and　then　reverses；　much　like　a　column　of　water　in　a　fountain　that　has。been　pushed　up　and　then　tumbles。back。on　itself　when　the　energy　that　pushed　it　up　can　no　longer　hold　up　the　weight　of　the　water。　For　a　trader；　the　challenge　is。to　identify　that　exact　moment　when　the　push　that　sends。price　in　one　direction　or　the　other　has。exhausted　itself　and　the　retracement　has。begun。　Drummond　Geometry　offers。the　technical　tools。to　identify　this　phenomenon。　In　Figure　1。6；　we　see　this。pattern：　First　the　market　breaks。the　nearby　support　level　and　the　bar　closes。in　that　area。　Then；　in　the　following　bar；　the　nearby　support　area　holds。and　does。not　break。　This。pattern　is。an　〃exhaust　buy〃　signal；　and　we　will　see　many。examples。of　this。signal　in　the　following　chart　analysis。　

In　Figure　1。7；　we　see　three　price　charts。of　the　USDJPY；　which　show　how　Drummond　Geometry　sets。up　time　frame　correlation。　The　support　and　resistance　areas　from　the　longer　time　frame　chart　are　overlaid　on　the　chart　of　the　next　shorter　time　frame。　The　left…hand　chart　is。a　two…year　bar　chart；　in　which　each　bar　represents。two　years。of　activity。　The　large　arrow　shows。how　the　nearby　resistance　for　that　bar　is。overlaid　onto　the　chart　to　the　right；　which　is。a　one…year　bar　chart。　On　the　one…year　chart；　the　two…year　resistance　is。plotted　as。light　gray…bars。positioned　behind　the　one…year　price　bars。　Similarly；　the　nearby　resistance　and　support　areas。from　the　yearly　chart　are　overlaid　onto　the　quarterly　char　I　on　the　right…hand　side　of　this。figure。　At　this。point；　it　bees。clear　how　thisrrelation　of　time　periods。can　be　graphically　represented。　I　have　also　shown　on　this。yearly　chart　an　exhaust　buy　signal；　which　occurred　in　the　USDJPY　at　the　very　beginning　of　2005。　Although　the　time　frame　is。radically。different—one　year　bars。in　Figure　1。7　versus。the　daily　bars。of　Figure　1。6—the　technical　pattern　of　the　exhaust　trade　is。identical。　
In　addition　to　the　buy　signal　in　Figure　1。7；　I　have　marked　two　target　areas。for　this。long…term　trade。　How　do　I　establish　these　areas？　According　to　Drummond　Geometry　theory；　the　market　will　move　from　resistance　to　support；　and　when　it　reaches　support；　it　will　move　back。to　resistance；　and　that　pattern　will　occur　in　all