In last night’s issue of the TMV Swing Trading Report I wrote about the confluence of resistance displayed on the February Lean Hogs chart. Prices had advanced slightly through the short-term ascending median line and were poised to test the long-term median line, as well as testing the prior major swing high of 81.37, posted on September 21, 2010. Adding to the importance of this confluence was the completion of the bullish action- reaction cycle on the January 7th reversal date. It didn’t take long for the market to react to all the negative price action as February Lean Hogs turned lower the very next day and are currently trading over 125 points lower.
Why is this important? Understanding how “Action-Reaction” and reversal dates influence price action would have alerted the trader that the cycle had reached its maturity, therefore allowing them time to exit near high or even reverse. To learn more about “Action-Reaction” go to www.tradersnetwork.com.
