Magazine article Modern Trader

Tech Talk: Trouble Ahead

Magazine article Modern Trader

Tech Talk: Trouble Ahead

Article excerpt

Exactly one year ago, in the segment titled "Back to basics," we discussed how the corn market was preparing for the next move higher and would use a gap on the charts at the time as a place for buy orders. The market ultimately continued higher until a peak was finally posted this summer. The peak also marks an important turning point as it was indicated by the well known head and shoulders formation (see "Head over heals"). That formation finally was confirmed in September with a break below the "neckline" shown on the chart as a dotted line.

From that breakout point in the neckline, another $1.86 1/4 decline could be seen until the measuring objective of $4.37 is filled. As is the case with many head and shoulders formations, it is not uncommon to see a moderate pullback just above this breakout point. Place sell orders at the first Fibonacci retracement level drawn from the move off the right shoulder high. …

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