## Monday, March 21, 2005

Trading by targets. Look at this nice Euro move from this night
110 ticks for all who took the trendmove from 1.3350 short

The new Targetcalculator spreadsheet tells you where you are and what moves are probable. (To open you will need Excel)

The sequence is always the same:
Trendmove, countertrendmove, trendmove, countertrendmove...
On the spreadsheet the red arrows describe a downmove, the blue ones an upmove

Of course as we all know, sometimes a countertrend changes it's label and becomes the first leg of the next trend move. And the spreadsheet takes care of that, when you look at the dotted lines.

For this spreadsheet to work you need to know 3 things:
1. How far does a trendmove go in this particular contract.
2. How far does the countertrend move go.
3. Where was the last major Daily High or Low

To determine the trendtarget I started with Antiicc's Euro trendtarget of 110 ticks. I don't know, how he calculates his trendtarget so I thought about a way to determine the Trendtarget. Using the Average True Range of the last 22 days on a daily chart seemed to be as good as anything else. I'm open to other suggestions. Only thing necessary: The target needs to be smaller than the average daily (high - low). The average true range seems to give me numbers which are about 68% of the average daily range and which proved to be a good start, as at least on Euro, when i calculated the spreadsheet it gave me the anticipated 110 ticks.

The countertrendrange is usually (in a somewhat trending market) betwenn 38% and 40% of the trendrange. On Euro I got the 44ticks Anti uses by using 40% of the trendrange of 110 ticks.
Last you take a daily chart and look for the last major high (MSH) or low (MSL). Enter it in the yellow fields on the spreadsheet and you get a row of trendtargets calculated your numbers. Now you confirm one of the trend targets you got with the reality and see, if you can confirm the calculated trendtarget with the chart. If it's hit by a few ticks, best if it is exceeded by a few ticks, before a countertrend started you got it. If not, you might need to adjust the countertrend percentage number, until you got it right. By adjusting the percentage number you flatter or steepen the slope of an uptrend or downtrend.

Enter this trendmove target you can confirm on your trading chart in the yellow Pivot box and you are ready to start Voodoo Trading.

First determine, where you are:

Are you in a trendmove or in a countertrend move.
Then expect support or resistance at the minor S/R levels indicated on the spreadsheet.
A consolidation usually will have 2 levels as range boundaries.
If a trend continues, targets, especially trendtargets will get exceeded.
If countertrend targets are exceeded by 50% then a trendreversal has started.

I will keep you posted when I find more answers.