Forecasting Market Direction with "The Balance Line" (Part 2)

05/19/2009 12:01 am EST


Timothy Morge


Traders with any eye at all will be ready to catch price as it slows in its upward arc and then pauses along the Balance Line. The path above is clearly marked. The brief break below the trading range tells us that the true move to come after the pause in the arc will be a strong move down.

Is there money to be made in the travel of this pendulum from action, to pause, and then to reaction? If we sell the pause at the obvious horizontal Balance Line above, is there room to capture substantial profits once the pendulum completes a natural swing to the lower end of the trading range and make the hunt worthwhile?

Simple mathematics tell me that the swing from one mark of the pendulum's swing to the least possible mark below would net me nearly four times what I would risk. If I stalked this beast between the pause and the reaction lower, that would be a worthy trophy, indeed.

Knowing I can read the tracks and see the shadow, do I have an edge I can exploit, or am I left with the crowd to poke at the shadow of the pendulum, hoping to catch the great arc as it slows and pauses?


The universe moves, the world moves, we move, and the market moves. The universe moves in four dimensions: the three dimensions of space and at least one more that we recognize, the measurement of time. The universe may move in many more dimensions, but we know it moves in four dimensions. The universe moves, the world moves, we move, and the market moves.

So, in how many dimensions does the market move?

More tomorrow in part 3. Part 1 | Part 3 | Part 4

Timothy Morge

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