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If you look at the major range beginning at the 2360 low on the 1st
of September 1998 and follow it up to the 3165 high that was made
on the 28th of April 1999, you have a price range of 805 points over
a period of 163 trading days or for those of you that like to use
calendar days, a period of 239 days. With this information we can
now determine the support prices and the support dates for the SPI
over the next few months. First lets determine the price support levels.
PRICE
3165-2360
Range = 805 points.
First level of support is at 2858 . We find this as the Fibonacci
38.2% retracement level. The SPI broke this support level on the 28th
of May 1999 and traded 10 points lower to 2848. Initializing a 317
point range in the SPI's current correction. You may also notice that
2860 was a major weekly swing top on the 17th of July 1998. A case
of old tops becoming future bottoms.
Second level of support
comes in at 2762.5, or the 50% support level of the major range. THE
50% OR HALFWAY POINT IS A MAJOR SUPPORT LINE AND SHOULD ALWAYS BE
REMEBERED.
Third level of support is
Fibonnaci's 61.8% price level. This support line is placed at 2668.
You may notice on your weekly swing chart that at around this price
level, on the way up, the SPI made a lower bottom at 2677. This occurred
on the 15th of December 1998. This lower bottom was the ONLY lower
swing bottom the SPI made during this rally and not until after the
major top of 3165 had been made did the SPI make another lower bottom.
TIME
163 Trading days
239 Calendar days
Calculating ranges in time is very simple. Because I am calculating
ranges in both calendar and trading days there will be 6 dates to
watch for. Using the same percentages I used in price I will now use
to divide time. You will be able to take note of these days and watch
for changes in the SPI's trend.
Trading Days
23/7/99 - 19/8/99 - 15/9/99
Calendar Days
2/9/99 - 10/10/99 - 7/11/99
I have not included the 100% in time dates. You can do that by adding
63 trading days to the 15th of September 1999 and 92 calendar days
to the 7th of November 1999.
There are many forms of
time & price analysis. This article touches on the vast nature of
the subject. In no way is this article advising you to trade based
on it's content. For more information on using these forms of time
and price analysis you can contact Solomon Thallon on 07-3832 4733,
or by email Solomon@gannswings.com
All charts are produced courtesy of HotTrader.
Happy
trading,
Solomon
Thallon
HotTrader, Australia
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