46A COMPLETE GUIDE TO THE FUTURES MARKET
 The limited price data available for many futures contracts—even those that are the most actively 
traded contracts in their respective markets—makes it virtually impossible to apply most chart analy-
sis techniques to individual contract charts. Even in those markets in which the individual contracts 
have a year or more of liquid data, part of a thorough chart study would still encompass analyzing 
multiyear weekly and monthly charts. Thus, the application of chart analysis unavoidably requires 
linking successive futures contracts into a single chart. In markets with very limited individual con-
tract data, such linked charts will be a necessity in order to perform  any  meaningful chart analysis. In 
other markets, linked charts will still be required for analyzing multiyear chart patterns.   
 ■ Methods of Creating Linked-Contract Charts  
 Nearest Futures 
 The most common approach for creating linked-contract charts is typically termed  nearest futures.  This 
type of price series is constructed by taking each individual contract series until its expiration and 
then continuing with the next contract until its expiration, and so on. 
 Although, at surface glance, this approach appears to be a reasonable method for constructing 
linked-contract charts, the problem with a nearest futures chart is that there are price gaps between 
expiring and new contracts—and quite frequently, these gaps can be very substantial. For exam-
ple, assume the September coff  ee contract expires at 132.50 cents/lb and the next nearest con-
tract (December) closes at 138.50 cents/lb on the same day. Further assume that on the next day 
    FIGURE   5.1    March 2016 Russell 2000 Mini Futures
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