How To Achieve A Trading Objective

  • May 25, 2001
  • Marc Dupee

One of the complaints I most frequently hear from
consistently successful traders is the difficulty of mastering the art of the
exit. One way to get a handle on this is with the measured move. 

Take natural gas. On May 1, I wrote the following about
June contract in the Futures Market Recap:

Now the leading contract on the Implosion-5 List, natural gas

(
NGM1 |
Quote |
Chart |
News |
PowerRating) decoupled from the energy complex and fell for a sixth consecutive day,
tagging a four-month low. Nat gas also fell out of a four-month descending triangle.
Traditional measured-move analysis suggests this contract will test 3.860 now that June gas has closed decisively below 5.000 on rising volume out of the
pattern. 

Natural gas
(
NGM1 |
Quote |
Chart |
News |
PowerRating)
futures remain on the Implosion-5 List
and also on the
New 10-Day Low List and fell to a low of 3.950 before settling down .081 at
3.973. This contract has nearly achieved its measured move objective. To learn
how to identify patterns that suggest the a market will trade to a certain
objective or level, see my article in the Futures Education section called Defining
Risk/Reward Ratios In The Futures Markets. 


British pounds
(
BPM1 |
Quote |
Chart |
News |
PowerRating) looked pretty dismal after they plunged to
their lowest level of the year yesterday. Revised GDP figures came in
stronger-than-expected at 2.6% in the United Kingdom and that reduces the odds
of the Bank of England lowering interest rates. The economic news provided the fundamental underpinning to a Turtle Soup Plus One Buy
reversal playing out in today’s session. The pound gapped open, successfully
tested the low of two days ago (leaving an abandoned baby), and then closed
.0134 higher at 1.4212. 

Also in the currencies, the
Japanese yen
(
JYM1 |
Quote |
Chart |
News |
PowerRating) continued testing lower, but is still being
dominated by the gap opening and expansion bar from two days ago. The Doji
(candlestick) bars of the past two day’s pullback are indicative of a change and
the presence of upside momentum. 

July Cotton
(
CTN1 |
Quote |
Chart |
News |
PowerRating) hit
a 15-year low making good on its Implosion-5 List
and
New 10-Day Low readings. This contract fell out of a descending triangle
and, like natural gas, essentially achieved its measured move objective (40),
closing 1.91 lower at 40.55.