Saturday, April 13, 2013

A review of the bigger picture

Back in December I made this post about looking at the bigger picture. The charts shown were prepared using the monthly timeframe, and clearly showed the congestion on certain instruments that resulted in a lack of trends over the previous couple of years.

On that post I made the following comment that those charts "also fill a trend follower (such as myself) with a degree of anticipation, as no doubt a pronounced trend will start in some, or maybe all, of these markets in 2013, which will no doubt fuel profit-generating trends on shorter timeframes, such as the daily timeframe that I predominantly use".

Well, as we all know, we have now started to see a decent appear appear in those markets. The reasons behind those movements are not important - the fact is that a trend has emerged, and a trend followers job is to jump in on those trends as and when they appear.

I've shown the updated monthly charts for the Dow and the Japanese Nikkei, which clearly show this. Although I do not trade the monthly timeframe, seeing a trend developing in a longer timeframe is another way you can determine what bias (if any) you should have.

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