Wednesday, November 21, 2007

Reading the MTFS indicator



The published market snapshots on the other blog do not necessarily express clrealy the way a chart must be read.

In this case, if we take a look at yesterday's snapshot, and focus primarily on MTFS, we can see the MTFS lines on the 60mins hovering around low levels without crossing: it is a sign of a congestion with a lower bias. This figure hardly ever works the other way around as bear and bull patterns do not quite match in a mirror. The market is not 'symmetrical'.

The daily MTFS is even clearer: DOWN! No crossing and a negative gradient indicating a support must be found lower. Yet if one believes a MM and/or Fib level is rock solid or if significance level is not that great, one may be a little less bearish and opt for rather anticipating a congestion or a trading range.

On the weekly chart, which does not look the easiest to read, one can see a very early crossover of MTFS lines indicating also that what ever happens will be at least a little bearish.

Obviously all the other tools will confirm this scenario, but we here see that MTFS is read by its overall shape, its behaviour, and by its lines crossing