Exhausts

[Trader Question]

When a market exhaust, we always think in terms of minimum target of pldot refresh. I believe this is the case when prices exhaust in energy areas which are locating further away from envelope confines. How about if further out is at envelope confine?

For example, Lesson 30, video 1.7, screen 64. Bar 1 closed above oncoming ET, so Nearby support for bar is from pldot to ET. Any area under M-pldot for bar is Further out area, so 6-1 up which locates at EB is in Further out support. Prices went down to M-EB, so we have monthly exhaust. What's the target: pldot or ET?

My 2 cents: We can say that M may be cycling up, target ET, depending upon what happens at M-pldot. But in this situation when we have exhaust at M-EB, we can ignore the warning "depending upon what happens at the pldot" and just sit and relax anticipating that M-pldot will likely push up because of strength in support from exhaust last month. This may be the reason that daily popped above M-pldot in daily screen for bar 3-see screen 70.

Thanks

HB

[pldot]

When you have an exhaust you are right that we look for a pldot refresh, but keep in mind that this includes a refresh to the live dot as well as to the static pldot, and that can take the refresh much closer to, or at the envelope top if the envelope and dot are moving up smartly. Re your comment that you can relax and not worry about "what happed at the pldot" I suggest that this is too strongly put and that idea will come back and bite you one day. Otherwise you're on the right track.

[Trader Question]

Ok, I think I did not put my question properly. Let me try again.

Firstly I will give a scenario: Suppose last month close was above oncoming ET, so we place nearby M-support at ET to pldot. So, now we know any area under M-pldot is Further out support area, so if prices go there, by definition, we can have an exhaust.

So, if in above scenario prices go to M-EB,we have an exhaust, what's the target? Is it upto pldot only or upto ET?

Thanks

HB

[pldot]

Target would be the pldot/live dot area and if that is broken (in the famous phrase "depending on what happens at the pldot") then the ET, and hopefully beyond that..

Initial target would be the dot, and one hopes for more....

When you approach the dot you would be assessing the characteristic of the ltp to see how the flow is reacting to this level, and so can make a judgment about hanging in or taking profits.

[Trader Question]

So that means, that whether we have nearby or further out at the envelope confine, target is same: first to pldot and than to other side of envelope confine, Right?

H.B.

[pldot]

Yes, that's right....