You'll see expanded coverage for Forex: 18 currency pairs. In the analysis posts, I'm tossing the terms "support" and "resistance", replacing them with variations on "reversal". I'm also changing how I count days remaining in the life of an option. And to avoid a growing problem with comment spam, I've tightened security so commenters will need to register.
Here are the details:
Forex
I'm expanding Forex coverage to the 18 most liquid pairs. I'll do the scan after the Morningline is posted, and the analysis will be the same as that used for stocks: Parabolic SAR, then trend direction and the Average Directional Index to judge the strength of the trend.
Analyses will be posted as separates, except when one currency signals against several counter-currencies (such as the yen did on Friday). In that latter case, I'll do a single post.
The pairs are:
| AUD/CAD | EUR/JPY |
| AUD/JPY | EUR/USD |
| AUD/NZD | GBP/CHF |
| AUD/USD | GBP/JPY |
| CHF/JPY | GBP/USD |
| EUR/AMD | NZD/USD |
| EUR/CAD | USD/CAD |
| EUR/CHF | USD/CHF |
| EUR/GBP | USD/JPY |
Terminology
I'm finding the "support" and "resistance" terminology to be a bit imprecise and misleading.
For one thing, the meanings reverse depending upon whether you're dong a bull case or a bear case. In a bullish analysis, resistance is above the current price and support below. In a bearish analysis, resistance is below and support above. Not too terribly difficult, but also potentially a bit confusing.
Also, support and resistance suggest something solid: The floor supports my weight; the brick wall resists my forward progress.
Whereas what we're really talking about is price levels where reversals have occurred in the past, suggesting that the progress of prices up or down will at least pause at those levels because there are shares on the table bought at those prices and managed by people who are eager to get rid of them.
So, going forward, I'll use the terms "reversal", "reversal level", "reversal upward", "reversal downward" or some other variation ("reversal point", "reversal area"). And of course I'll keep the word "congestion" that I've always used to denote a price range containing many reversal levels.
This terminology eliminates the shifting meanings and more accurately describes what such price levels are all about.
Days Remaining
Every option has an expiry, or expiration date. For equity and index options, it's the Saturday following the third Friday of the expiration month.
That date, actually, does the trader very little good. There's no way to trade on a Saturday, so what I really care about is the last day an option can be traded, the Friday.
I have been, in a mathematically unsound way, counting days remaining before the last trading as days until expiry. It's just wrong. The true days until expiry is how many days before the Saturday, and that's important because there are that many trading days left.
So I'll be using "remaining trading days" or "trading days left" or some variation as my terminology. The actual count is one greater than under the old method. So on Monday, March 15, there will be 5 trading days left for the March options. Under the old terminology, I would have written "4 trading days until expiry".
(Another plus, I get to eliminate both a Britticism and a Latinate term. I mean, Americans don't really say "expiry" unless they drink their tea with one pinky extended. And "expiration" is Latin. Cicero would understand it. "Trade", "day", "left" all date back to Anglo-Saxon.)
Comments
Spam started showing up in the comments, so I've tightened the security a bit. You'll need to register with the Private Trader in order to post comments.
To register, click on the "Follow" button near the bottom of the left column.
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