Click on the chart to enlarge it.
We've now zoomed in substantially and we're analyzing a two-week chart of Cotton.
Our analysis shows us that at the time of the ZeroHit short entry on the quarterly and two-month charts, NMC on this two-week chart was not in a position to support a short trade. (Please see the label on prices for the exact location where the quarterly and two-week ZeroHits occurred.)
NMC had come back to the zero line from above, and prices were still finding potential support at the Fast NMA. To remain consistent in our use of the Ocean rules we need to wait for a valid Ocean setup on the current timeframe to contemplate a potential short trade.
Fortunately, about six bars later a very clear NMC Cross Kiss ZeroHit develops (labeled as such), setting us up for a potential short trade.
Note also that the Fast NMA was below NMA, and that prices had found resistance at the Fast NMA, more evidence that this is likely to be a good signal.
Lets see what additional information we can glean from lower time frames to justify a short position:
(This is the end of Part 4. Go to Part 5.)
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