Below are June Bonds CISCO Visual graphics for May 2, May 3 and May 4
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Above are June Bonds CISCO Visual graphics for May 2, May 3 and May 4 1996
The CISCO Visual Graphic above just shows the 5 day overlays.
This is the time-frame of interest for T-Bonds.
Lets follow an example of using the 5 day CISCO Visual Graphic to enter a
trade on May 2 and then monitor the trade on May 3 and May 4.
Strategy for May 3
------------------
Look at the extreme left of the CISCO Visual Graphic at the May 2 data.
The 5 day overlay is bracketing on May 2.
The 20 and 10 day overlays are also bracketing as shown in first graphic.
Using the five day Overlay:
-- Take a Responsive short when price falls below upper octant 10515
Stop placed at 10518, the bracket upper limit.
-- Take a Responsive long when price rises above lower octant 10429
Stop placed at 10426, the bracket lower limit.
-- The Target for the trade is the bracket middle at 10506.
The risk is $93 with a potential of $281
This is a reward/risk ratio of 3 to 1.
Using the five day Overlay:
-- Take a breakout long when price rises above 10518
On the day of the breakout place a stop at the upper octant 10515
-- Take a breakout short when price falls below 10426
On the day of the breakout place a stop at the lower octant 10429
What happened on May 3
----------------------
Look at the middle of the CISCO Visual Graphic at the May 3 data.
The 5 day bracket immediately broke out on the upside.
We assumed a long entry at the upper limit of the May 2 bracket at 10518.
We placed a stop at the May 2 upper octant price of 10515
That stop was not elected since the low for May 3 is 10519.
The trade remained open at the close.
Strategy for May 4
------------------
Look at the middle of the CISCO Visual Graphic at the May 3 data.
The reference points at the end of the day May 3 will determine our strategy for
the market of the next day May 4.
The market of May 3:
-- is adequately facilitating trade (Tf = 3.28)
-- has a reasonable volatility (Vo = 5.86)
-- has no new highs/lows
-- more than doubled total, commercial and public volume
-- has lower commercial activity at 10519.
The reference points support continuation of the trending market condition.
The confident trader will enter the market the next day without a stop.
The conservative trader will want a stop.
The stop would be:
-- either the former octant at 10515.
-- or the latest prior node at about 10525
The node is that blip of volume (sub-distribution) where the market
pauses. It is identified by the horizontal dashed lines around 10525
on the CISCO Visual Graphic.
If a protective stop is desired, we would opt for the latest prior node
10525, since that insures a profit.
What happened on May 4
----------------------
Look at the extreme right of the CISCO Visual Graphic at the May 4 data.
The market of May 4 opened higher (gap to 10613) which was also the low of
the day. So the stop was not hit and the trade remains open at the end
of the day.
Strategy for May 5
------------------
Look at the extreme right of the CISCO Visual Graphic at the May 4 data.
End of day analysis of the reference points shows:
-- higher volume
-- no commercial capping of the upside
-- good values for the Trade Facilitation and volatility.
The reference points support continuation of the trending market condition.
Again the confident trader enters the day stopless.
The stop for the conservative trader would be:
-- either the latest prior node at about 10623
-- or the former octant at 10515.
If a protective stop is desired, we would opt for the latest prior node
10623, since that insures a profit.
What happened the next day, May 5
---------------------------------
The next day May 5 (not shown) again there was no stop-out.
Our procedure is to continue evaluating the market day-by-day until:
-- either a stop was hit (if we had one)
-- or the reference points indicate the advisability of an exit.
For more information contact CISCO Futures at:
WEB address: www.cisco-futures.com
Postal Address: 14571 E. Mississippi Ave., #202, Aurora, CO 80012 USA
Telephone: 303-306-1521 or 1-800-800-7227
Fax: 303-306-1572
Email: dljones@cisco-futures.com