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68

Trading By The Book -

Part IV

4909

57

3695

I"

3642

3599

/! = 81 = 81 D=103i 0=3899

H=3883 L=3768 C=3??5

Figure 54 On 0929, the weekly oscillator segment turns up. The daily oscillator is not yet oversold. On 1004, the weekly oscillator turns ftat again. From then until 1025, it yo-yos between flat and down, never giving me a chance (thankfully) to enter. On 1026, the weekly oscillator turns up. 1 cant place an order because the daily oscillator is already overbought. By 1031, prices have taken out the 1-2-3 low and have started to make a retracement. Maybe soon Ill get a chance to get into this market.



3957

3905

3B00

3747

3&95

3S42

3590

luy slop ->

H

= 83 63 D=102? 0=3759 H=3B15 L=3757 C=3812

Figure 55 1031. At this point 1 want to show you something about the daily oscillator that occurs from time to time. Its difficult to state as a rule, so Ill demonstrate with the chart what it Is that 1 want to explain.

The weekly oscillator is pointing strongly up. The daily osciliator shows rising bottoms.

Prices have taken out a 1-2-3 low. The recent high has taken out the upper range of an envelope, and prices have closed above the envelope.

When the daily oscillator gets in this kind of situation, it may not fully retrace to oversold. In fact it may not even leave the overbought area. Thats why I cant totally believe in oscillators, they are not always right. But its possible to learn to read and know their idiosyncrasies when viewed with respect to the price action.

From time to time it happens like this. In fact, as 1 write this paragraph, it just happened in Soybean Oil contracts.



BOBK

Figure 56 How does the daily oscillator tel! me that its doing this? Its as easy as 1-2-3! Yes even oscillators make 1-2-3s. The reverse is true of down markets and their oscillators when you see them.



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