Anyone who has been following my work over the past three months knows, I
have been keeping a close eye on the Aussie as it works its way across the
SPX topping pattern from last year. It has been a moving target to appraise,
but did point out in May where the lows would be made in June and now appears
to be pointing to another inflection point here in August. For a quick explanation
of the methodology used in this comparison, see Here.
Using the 2011 SPX model's proportion of a 98.9% retracement of the intraday
high would generate an equivalent target in FXA of 105.90. Considering FXA
reached an intraday high of 105.73 today, puts us in very close proximity
of finding the next pivot - which would be lower. The same could be said of
the SPX.
Fractals in motion.
Considering that the respective markets are positioned so close to where the
pattern would be considered broken (>100% retracement), presents an excellent
opportunity to position yourself on the short side of this market. 98.9% is
a very strong move - but it's not 100%.
Although I am an active trader, I have always taken a broad perspective when
approaching the markets. I respect the Big Picture and attempt to place each
piece of information within its appropriate context and timeframe. I have found
that without this approach, there is very little understanding of ones expectations
in the market and an endless potential for risk.
I am not a stock picker - but trade the broader market itself in varying timeframes.
I want to know which way the prevailing wind is blowing, where the doldrums
can be expected and where the shoals will likely rise. I will not claim to
know which vessel is the fastest or most comfortable for passage - but I can
read the charts and know the risks.
I am not a salesperson for the market and its many wares. I observe it, contextualize
its moving parts - both visible and discrete - and interpret.
I practice Market Anthropology - Welcome to my notes.
Erik Swarts is not a registered investment advisor. Under no circumstances
should any content be used or interpreted as a recommendation for any investment,
trade or approach to the markets. Trading and investing can be hazardous to
your wealth. Any investment decisions must in all cases be made by the reader
or by his or her registered investment advisor. This is strictly for educational
and informational purposes only. All opinions expressed by Mr. Swarts are subject
to change without notice, and the reader should always obtain current information
and perform their own due diligence before making any investment or trading
decision.
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