I know I bang on a lot about the interaction between price and the FLD, so I will keep this short and sweet. Last week I wrote about the F-category interaction that happened in the S&P 500 between Monday 22 September and Tuesday 23 September 2014.
Following an F-category interaction we expect a G-category interaction. When I wrote the FLD Trading Strategy “manual” I said this about G-category interactions:
The G-category interaction occurs on the downside move towards the 80-day cycle trough. It usually occurs between 47 and 64 bars since the most recent 80-day cycle trough, and it is characterized by price moving back up to the FLD, often touching the FLD, and then resuming the descent into the 80-day cycle trough.
This week the S&P 500 provided a perfect example of a G-category interaction with the 20-day FLD:
Now price is falling into the 80-day cycle trough, and we need to stand by for that event. Be warned that occasionally price and the FLD will form a double G-H interaction, so we need to be careful of jumping into long positions prematurely.