股票期货突破技术分析(英文原版)-第5章

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rt；　and　when　it　reaches　support；　it　will　move　back。to　resistance；　and　that　pattern　will　occur　in　all　time　frames。　Resistance　and　support　will　either　be　weak。and　break。through　to　a　secondary　level　of　resistance　or　support；　or　they　will　hold　and　be　strong；　kicking　prices。back。in　the　opposite　direction。　

If　we　have　a　yearly　low；　then　what　is。the　target　for　this。currency？　Where　can　we　expect　it　to　go　on　a　yearly　basis？　The　yearly　target；　like　targets。in　other　time　frames。in　Drummond　Geometry；　depends。on　where　the　market　is。when　it　starts。　
If　the　price　starts。from：　
。　
far　above　the　envelope；　then　the　first　target　is。the　envelope　top　

。　
at　the　envelope　top；　then　the　target　is。the　other　side　of　the　envelope；　depending　on　what　happens。to　the　PLdot　

。　
inside　the　envelope；　then　the　target　is。the　other　side　of　the　envelope　or　lower　


In　the　case　of　the　yearly　chart　in　Figure　1。7；　because　the　close　of　the　price　bar　for　2001　was。near　the　envelope　bottom　as　projected　for　2005；　the　target　for　2005　will　be　the　PLdot；　and　if　that　breaks。and　the　market　continues。to　the　upside；　then　the　secondary　target　would　be　the　opposite　side　of　the　envelope　system。　Note　that　these　targets。are　determined　far　in　advance；　at　the　close　of　December　2001；　and　projected　out　for　2005。　
If　we　can　say　that　it's　likely　that　price；　once　it　goes　inside　a　channel；　will　go　to　the　PLdot　line　or　the　opposite　side　of　the　channel；　then　we　have　a　target　for　the　year。　And　when　the　market　gets。to　that　target；　then　we　reassess。and　make　a　judgment　about　the　market's。next　goal。　
Suppose　that　at　the　end　of　2004；　we　were　watching　the　U。S。dollar/Japanese　yen　exchange　rate　and　were　applying　Drummond　Geometry　analysis。to　the　market。　What　would　we　have　been　seeing？　Figure　1。8　（two…year；　yearly；　and　quarterly。charts）　and　Figure　1。9　（monthly　and　weekly　charts）　lay　out　the　basic。dynamics；　and　Figure　1。10　shows。the　exact　entry　points。on　a　daily　chart。　From　two…year　bar　charts。all　the　way　to　daily　charts—that's　quite　a　span。　But　each　contributes。to　the　total　picture　and　sets。up　a　pelling　case　for　a　major　market　turn　to　the　upside　starting　in　December　2004　and　January　2005。　

（These　last　chartsntain　a　lot　of　information　and　are　a　bit　difficult　to　render　in　the　black…and…white　formal　necessary　for　print　reproduction；　on　the　puter　screen；　however；　the　use　of　color　makes　them　easy　and　quick。to　read。）　
Here　is。a　breakdown　of　what　we　would　have　seen　by　applying　this。analysis：　
On。the　two…year　chart。　The　market　was。in　congestion　（successive　price　bars　were　dosing　on　opposite　sides。of　the　PLdot）；　and　the　PLdot　was。moving　sideways。across。the　page。　We　were　in　the　middle　of　two…year　nearby　support。　
On。the　one…year　chart。　The　market　was。in　a　trend　rundown；　with　the　next　anticipated　type　of　trading　being　congestion　entrance　to　the　upside。　We　were　a　long　way。below　the　yearly　envelope　bottom；　and　so　we　were　looking　for　a　move　back。up　at　least　to　the　envelope　bottom；　and　probably　to　the　yearly　PLdot；　and　possibly　to　the　yearly　envelope　top。　We　were　in　yearly　support　and　in　two…year　support；　with　a　significant　bias。for　a　move　to　the　upside。　In　January　2005；　we　would　be　watching　to　see　if　nearby　yearly。support　would　hold　and　bee　strong；　and　thus。flag　a　yearly　exhaust　entry。　
On。the　quarterly　chart。　We　were　in　yearly　support；　and　in　quarterly　further…out　support；　and　a　potential　exhaust　pattern　was。setting　up　for　a　strong　return　to　the　quarterly。PLdot。　In　the　first　quarter　of　2005；　we　would　have　been　monitoring　the　move　away　from　quarterly　nearby　support　to　validate　the　exhaust　buy　signal。　
On。the　monthly　chart。　On　the　left…hand　side　of　Figure　1。9；　we　see　exhaust　entry。signals。as。the　market's。downtrend　stalls。in　monthly；　quarterly；　yearly；　and　two…year　support。　Monthly　nearby　support　is。holding　and　is。showing　to　be　strong。　
On。the　weekly　chart。　On　the　right…hand　side　of　Figure　1。9；　we　are　again　seeing　multiple　exhaust　buy　signals。as。the　market　tests　support；　bounces。off；　es。back。for　a　retest；　and　then　starts　off　to　the　upside　with　more　conviction。　The　Drummond　Geometry。trader　can　take　action　on　these　exhaust　buy　signals　with　some　confidence　because　he　can　see　that　we　are　in　two…year；　yearly；　quarterly；　monthly；　and　now　weekly。support；　and　all　with　definite　upside　targets。　

On。the　daily　chart。　Taking　all　of　this。information　into　consideration；　we　e　in　the　daily　chart　（Figure　1。10）　and　again　see　multiple　exhaust　buy　signals。as。the　dollar/yen　exchange　rate　tests。the　major　bottom　that's。being　put　in。　If　the　trader　has。a　long…term　perspective；　he　could　build　a　large　position；　buying　on　the　dips。　The　multiple　daily　exhausts。into　multiple　longer　lime　period　support　during　December　2004　and　January　2005　provide　the　opportunity。　
Of　what　value　is。the　long…term　chart　analysis？　In　2003；　the　dollar/yen　exchange　rate　ran　from　approximately　101。67　to　121。39。　That's。a　huge　move　in　these　markets；　and　Drummond　Geometry　had　a　set　of　indicators　that　helped　the　trader　get　in　near　the　very　start　of　this。move。　What's。more；　the　methodology　provides　tools。that　help　establish　reasonable　targets。and　monitor　the　position。　The　trader　knows。at　all　times。what　the　market　has。to　do　if　this。trade　is。going　to　work。out。　

Monitoring　
How　do　we　know　if　our　predictions。and　analysis　are　correct：　The　possibility　of　being　wrong　is。always。present　because　we're　human；　and　so　we　need　to　have　some　means。of　monitoring　the　market　activity　to　tell　us。if　our　predictions　are　on　target　and　accurate　or　not。　
The　element　of　monitoring　is。essential　to　Drummond　Geometry　trading。　To　monitor　effectively；　we　need　to　recognize　the　quality　of　market　flow　and　to　understand　what　the　market　looks　like　when　it's。moving　successfully　toward　a　goal；　and　what　it　looks。like　when　that　progress。has。slowed　or　changed。　Flow　can　be　defined　in　a　number　of　ways。　The　simplest　way　is。to　note　how　the　market　is　dealing　with　resistance　and　support　on　a　shorter　time　frame。　If　resistance　is。holding　and　support　giving　way　on　the　shorter　time　period；　then　the　flow　is。down。　If　the　reverse　is。true；　the　market　is。headed　up。　The　methodology　also　includes。more　sophisticated　definitions　of　flow　using　range；　position　of　close　relative　to　the　high　and　low；　progress。through　the　envelope　system；　and　advance/decline　measures。　But　the　bottom　line　is。how　the　shorter　time　period　handles。resistance　and　support；　if　the　weekly。and　monthly　consistently　break。resistance　and　hold　nearby　support；　then　the　quarterly　and　yearly　bars。are　headed　up；　and　the　quarterly　and　yearly　upside　targets。should　be　kept　in　sight。　

The　world　is。a　plicated　place。　Huge　geopolitical　forces。shape　the　global　currency　markets。　Exchange…rate　charts。are　the　graphic。reflection　of　massive　changes。as。the　fortunes。of　countries。and　peoples。rise　and　fall。　When　major　shifts。occur—changes。in　interest　rate　policies；　wars；　shifts。in　national　priorities；　or　changes　in　regimes—the　relative　values。of　the　currencies。of　different　countries。can　be　on　the　move　in　a　major　trend　for　a　significant　period　of　time。　Although　it's。not　possible　for　the　individual　trader　to　know　or　understand　all　possible　fundamental　information；　it　is。possible　to　make　reasonable　predictions。about　the　extremes。of　yearly。price　action；　to　monitor　those　assumptions；　and　to　trade　them　successfully；　picking　off　the　yearly　highs。and　lows。and　thus。preserving　capital　or　building　wealth；　depending　on　your　goals。　
Trading　is。a　difficult　business。　It　requires。both　on…target　perceptions。and　mental　strength。　First　you　have　to　see　the　opportunity。　Then　you　have　to　take　the　opportunity。　You　have　to　stick。with　your　decisions。through　thick。and　thin　as。you　monitor　the　trade；　knowing　exactly　what　has。to　happen　if　you　are　wrong　and　what　has。to　happen　if　you　are　right。　
Trading　the　Forex　with　an　eye　on　long…term　Drummond　Geometry　charts。can　help　the　trader　keep　the　market　in　context　and　withstand　the　many　wide　countertrend　oscillations。that　will　shake　out　the　trader　who　is。not　equipped　with　the　long…term　perspective　that　yearly　and　quarterly　charts。provide。　Seeing　the　yearly　bar　develop　lets　the　trader　watch　the　background；　not　just　focus。on　the　foreground。　To　be　better　than　the　rest　in　trading；　as。in　so　many　fields；　we　have　to　do　something　different　from　the　rest。　In　trading　the　global　currency。markets；　one　tool　that　can　make　a　real　difference　is。a　careful　analysis　of　the　big　picture；　using　the　multiple　time　period　analysis。of　Drummond　Geometry。　

CHAPTER　2　


Trend　Spotting　With　TD　bo　
TOM　DeMARK　
Most　traders。are　trend　followers。　They　accept　the　widespread　belief　that　the　trend　is。a　trader's。friend。　Many　years。of　exhaustive　research　and　trading　experience　have　convinced　us。that　this。notion　is。flawed。　For　the　sake　of　pleteness；　we　have　added　a　corollary　to　this。premise—the　trend　is。your　friend；　unless　the　trend　is。about　to　end。　
Human　nature　is。such　that　we　are　inclined　to　extrapolate　current　events。into　the　future。　Some　expectations。have　outes。that　are　immutable　and　universally　applicable：　The　sun　rises。in　the　morning　and　sets。in　the　evening。　Cut　your　hand　with　a　knife　and　you　will　bleed。　Fall　from　an　elevated　level　and　gravity　will　pull　you　down。　There　are　no　exceptions。　Other　expectations。may　be　disappointed：　Flip　a　light　switch　and　a　dark。room　bees。bright—but　what　happens。if　the　electricity　is。not　in　service？　
Similarly；　in　terms　of　trading　markets；　as　long　as。buying　pressure　is　greater　than　selling　pressure；　a　market's。trend　is。up；　and；　conversely；　as。long　as。selling　pressure　is。greater　than　buying　pressure；　a　market's。trend　is。down。　To　expect　that　buying　pressure　will　continue　to　exceed　selling　pressure　and　extend　an　uptrend　indefinitely　or　that　selling　pressure　will　continue　to　exceed　buying　pressure　and　extend　a　downtrend　indefinitely　is。foolhardy。　No　market　trend　continues。forever；　just　as。no　tree　grows。to　the　sky。　Market　dynamics。are　not　dictated　by　the　forces。that　govern　human　nature。　Most　traders。are　content　to　trade　fort…ably　and　with　a　trend；　but　what　happens。when　buying　and　selling　pressure　move　into　equilibrium　or　when　buying　pressure　overes。selling　pressure　or　when　selling　pressure　overes。buying　pressure？　During　these　transition　periods。of　buying　and　selling　pressure；　market　fundamentals；　news；　and　expectations。usually　remain　intact。　However；　under　this。veneer；　the　supply/demand　dynamics。are　in　fact　being　redefined。　Maintaining　a　trading　edge　by　anticipating　these　internal　market　changes。is。imperative　to　ensuring　a　trader's。good　mental　and　financial　health。　
Opposing　the　Marketplace　
Contrary　to　the　widely。accepted　notion　that　markets　bottom　due　to　smart；　informed　buyers。having　inside　information　and　therefore　accumulating　positions。prior　to　a　rally；　our　research　has。shown　that　markets。reverse　a　downtrend　because　of　a　lack。of　selling；　and　by。default　price　moves。sideways。or　higher。　Similarly；　a　market　top　is。not　produced　by　savvy　sellers。learning　of　negative　news。prior　to　a　decline　and　then　coordinating　their　efforts。and　forcing　price　down。　Rather；　price　peaks。are　made　when　the　number　of　buyers。diminishes　and　eventually　disappears；　and　by　default　price　moves。sideways。and　then　down。　At　these　junctures；　unless。the　pool　of　buyers。or　sellers。increases；　the　lack。of　intensity　creates。a　trend　change。　To　extend　or　regenerate　a　trend；　it　is。necessar