20 lines
1.3 KiB
Plaintext
20 lines
1.3 KiB
Plaintext
45
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Chapter 5
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■ The Necessity of Linked-Contract Charts
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Many of the chart analysis patterns and techniques detailed in Chapters 6 through 9 require long-
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term charts—often charts of multiyear duration. This is particularly true for the identification of top
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and bottom formations, as well as the determination of support and resistance levels.
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A major problem facing the chart analyst in the futures markets is that most futures contracts
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have relatively limited life spans and even shorter periods in which these contracts have significant
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trading activity. For many futures contracts (e.g., currencies, stock indexes) trading activity is almost
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totally concentrated in the nearest one or two contract months. For example, in Figure 5.1, there
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were only about two months of liquid data available for the March 2016 Russell 2000 Index Mini
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futures contract when it became the most liquid contract in this market as the December 2015 con -
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tract expiration approached. This market is not particularly unusual in this respect. In many futures
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markets, almost all trading is concentrated in the nearest contract, which will have only a few months
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(or weeks) of liquid trading history when the prior contract approaches expiration.
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Linking Contracts
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for Long- T erm
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Chart Analysis:
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Nearest versus
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Continuous Futures |