Chart 2: Convergences... Zooming in with that diagonal support included. Notice 1404 horizontal support. Also notice the 20-ma fulcrum price support (green flat line into the future). Uh, what the hell is that???
Ok, I repeated last 20 days of price action to demonstrate the current 20ma fulcrum price. Notice that the prices in the white box are a clone of the last 20 days (I've labeled it "20-day fractal replication on the chart). Many folks don't realize that a 20-day moving average's current rollunder/rollover price is nothing more than the closing price from 20 sticks ago after market hours (or 21 sticks ago during market hours). Now see the 20-ma green where it's flatline in the white box? This is demonstrating that any positive deviation from those future closing prices on those specific future days will give a 20-ma "rollunder" (or continued upward ma slope) for that particular day. Any negative deviation from those future closing prices on those specific future days will give a 20-ma "rollover" (or continued negative ma slope) for that particular day. It does not matter one iota what happened with price (open,high,low,close) during any previous day!!!! For purposes of determining rollunder/rollover (or continued upward ma slope), only the closing price from 20 days ago (counted during the after hours period) matters.
For example, if Monday March 26 closes above the close of February 26, the 20ma will roll under and begin to ascend. No matter what price does on March 26, if Tuesday March 27 closes above the close of February 27, the 20ma will roll under and begin to ascend. And on and on and on. And conversely, current day closes below 20 sticks ago (counted after hours) will cause the 20ma to flex into a downward direction.
I believe the 20-day ma fulcrum price to be significant as a support and resistance boundary, especially with the diagonal and horizontal convergences I'm showing. If the market agrees with me, 1404 could be called major bull support into Tuesday.
Chart 3: Playing around with the first 3 days of price for next week (1st 3 sticks in the white box). Notice where the 20-ma fulcrum price (green line) has shifted to (to the closing price of three days after February 26th; that is, the closing price of March 1). We could go through the motions of tagging on Wednesday that 38.2% retrace I've encircled in red and just hash about on Thursday in either direction. It doesn't matter. What matters is next Friday. That's the 5th from the left stick in the white box. On that day, any closing price above that fifth stick's close of 1387.15 (equivalent to the 28.6% fib line) will reflect a positive flex on the 20ma line. Then on the following Monday, any closing price above 1374.14 (incidentally the most recent bottom) will also reflect a positive flex on the 20ma line. So while price (may) drop hard into and flex within that wide price range defined by the two long black sticks, the moving average will remain in ascending mode (to the points I've mentioned).
This is only one example of infinite directions we could go. But it illustrates what I've come to think of as a "mechanical bull", if you will. But it can become a "mechanical bear" too, you know. I think I do understand the current trading day's obligation to "pay off the debt" from 21 sticks ago. If I'm right, that big white stick says there is a big obligation due by April 19 that must be respected on that date. The price structure in which we arrive upon that date may say some very important things.
Chart 4: same as chart 3 except I'm showing fib retracement is from 2/22/07 to 3/14/07 (present). This demonstrates the multi-fib convergence of support just 3 points below 1404. So even more bull support... for now. But tax time is coming, and I suspect there will be some drawdown. It should be interesting to see what happens between April 15 and April 19.
Chart 5: By the way, April 19 lines up pretty nicely with a completely unrelated moving average TA technique I use, called the "Brink of Disaster" indicator. I posted a similar projection chart back on March 13. This chart plots its potential signal level boundary lines that form a convergence (the green parabola/circle boundary represents my "brink of disaster" calculation. See the fib & fork convergences tangent to the green B.O.D. circle on April 19th? I've also drawn in a green diagonal for tertiary support into that tangent, which also intersects into that date area. I would speculate that the lower BB would be there too by that date. That convergence date forms my "brink of disaster" line in the sand. Below that would be bear territory, obviously.
Despite all this work, the market will go where it wants regardless. I've gone on way too long... hopefully I have made little or no errors in my "presentation". All of this is my unconventional thought, and is just FWIW, which is absolutely nothing at all at the present time.
Edit: crap! I see that chart #2 doesn't display the last 3 days of the fractal. My zooming error there. Oh well, they are shown on charts 3 & 4, so no biggie.
Edited by spielchekr, 24 March 2007 - 01:45 PM.
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