tailieunhanh - Trend Forecasting With Technical Analysis Chapter 3

Chapter 3 INTERMARKET ANALYSIS. Seizing Trading Opportunities in a Shrinking World. Over the past few decades, when the financial markets were less volatile and tended to trade independently of one another, single-market methods of analysis were the mainstay of technical analysis and rightfully so. However, at this juncture, a narrow characterization of the markets, with its focus (if not preoccupation) on the inward analysis of each individual market, is much too limited. Traders need to expand their perspective to take into consideration external factors that affect each market. Here’s a simple analogy. Imagine yourself as a licensed pilot preparing to. | Chapter 3 INTERMARKET ANALYSIS Seizing Trading Opportunities in a Shrinking World Over the past few decades when the financial markets were less volatile and tended to trade independently of one another single-market methods of analysis were the mainstay of technical analysis and rightfully so. However at this juncture a narrow characterization of the markets with its focus if not preoccupation on the inward analysis of each individual market is much too limited. Traders need to expand their perspective to take into consideration external factors that affect each market. Here s a simple analogy. Imagine yourself as a licensed pilot preparing to fly your private plane from New York City to Washington . just before dusk one summer evening. Everything on your preflight checklist indicates that all of the plane s internal operating systems are functioning properly including visual fuel and oil checks control movements altimeter compasses flaps mags and engine runup. However you neglect to inquire about one critical external factor the flight service in-route weather briefing. In effect by ignoring the external environmental context in which your plane will be flying you are implicitly assuming that either the weather conditions will be favorable or will not adversely affect your flight. This could make for a hard landing no pun intended if in fact the weather conditions prove unfavorable for such a flight. Is trading Treasury notes crude oil the Nasdaq-100 Index or the Japanese yen any different if you are ignoring the broader intermarket forces affecting these individual markets Trend Forecasting With Technical Analysis 45 The cliché what you don t know can t hurt you is false. Ignorance is not bliss when it comes to piloting planes or trading futures or equities. If you have the right tools which give you pertinent information you will be able to make calculated decisions if you don t you are just gambling either with your life or with your hard-earned money. Sure

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