The Market Continues To Rise

The market has found resistance at an important price vibration of 1377 being a repeating range of 3 of the last 4 up runs. 

We need to be careful how we react to this price vibration and not simply assume that the market will change trend from this top. 

Position, pattern and volatility are still not yet confirming a move to the short side.

As a result the trend is still considered long with an open mind to any move the market makes to the short side.

Manage our open long positions with stops under the last swing bottom at 1350.

New trades are optional however there are no obvious swing entries available today.

Aggressive traders could consider a change in trend to have occurred once the 1354 or slightly less agressive 1350 swing bottoms are broken. 

But the safer short entry as always stated by Gann is once a lower swing top and bottom has been made. We will discuss this in the event the market moves to the short side.

Concluding that the trend is long and only long trades should be considered with stops at 1349

Gann Analysis Consideration – Time, Price, Position, Pattern and Volatility.

Time

The swing top on the 29^th February is:-

180 solar degrees from 31^st August 2011

225 solar degrees from 17^th July 2011

Price

The current swing top of 1377 is at the

175% level of the March 2011 up run.

225% level of the June 2011 up run.

150% level of the August 2011 up run.

This price vibration keeps us alert for the possibility of a change in trend off the 1377 top.

Being that 3 of the past 4 ranges are within the vibration this could easily be a top. Having said that it remains to be seen as to whether the market can push through to the next price level.

Position

The market is showing further strength by exceeding 100% of the previous run and also surpassing the double top level of May 2^nd 2011.

Pattern

The daily swing chart continues to make choppy irregular swings. Overall the pattern is higher swing tops and bottoms. Again we have no indication of any change in trend at the moment.

Volatility/Volume

The volume has continued at the lower levels. This can be an indication that a trend change is imminent. But we cannot read to far into low volume. We would prefer to see volume increase on the top of any run which would conclude that selling is absorbing all the buyers

Summary

Trend Direction

Daily Trend:-

No change to our last report - The daily trend remains long at this point. We need to remain alert to any move to the downside. At this stage though we do not have any signals from the market that the trend is in the process of changing.

Continue to trade long with the trend.

Trade Management

Open Trades:- Stop Loss positioned below previous swing bottom at 1349 (conservative)

New Positions:- No new positions are available to be taken under swing trade entry rules. We will need to wait for the market to retrace as part of a swing to take a mechanical entry as Gann instructed.

Trend Reversal

Aggressive trading would consider a change in trend once the swing bottom is broken at 1348. All long positions would be stopped out and closed at this level and new short positions could be opened at the same point. Stop loss for short positions would also be placed at 1378.

Elliott Wave Analysis

From and Elliott Wave perspective we see the market structure unfolding as follow:

In our last report the main concern relating to the Wave 2 Primary is that it has exceeded the origin of Wave 1.  An alternate count is now been considered which will include a bullish outcome. We will discuss the alternate count in the next report.

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