As the year ends, we have a convergence of two long-term trend lines. Above, there is a Resistance line going back to May of 2014.. That’s an 8-month old T-line in SH. Below there is a Support T-line going back to the Oct 1st Contract low. That’s 3 months old. Most technicians believe the older the t-line and the more sigfificant it is. Now Technical analysis is nice. However, if all you needed was technical analysis, there wouldn’t be any cab drivers in Chicago. AT best, it gives you a reason for entering the market. At worse, it gives you a security blanket to add to losers, hoping that they turn around at the t-line. longer term, trade management and cutting losses is still the only defense you have against riding losers. With that being said, the chart below gives you a couple ideas. Do you fade the t-line? Do you sell go with a break out above or below that t-line? That’s the question. The reason longer term t-lines are significant is that everyone with a pulse and a ruler can identify the t-line. That means both Bulls and Bears look to those T-lines. They look to them to either 1) fade 2) try to justify their position, either winner or losers and 3) break out traders try to trade the moves through those lines. All three combined give reason to be aware of the existance. Those purely fundamental traders who completely discount technical are ignoring a tool. Simply to discount technicas off hand because “they don’t ALWAYS work” misses the point. That being said, look to the lower t-line hera around 10.22 to 10.20 as either an opportunity to re adjust, or an opportunity to initiate a trade. Bull or Bear, you have to watch these T-lines.
