Saturday, April 07, 2007

Tech. Analysis

I was trawling through some archived posts from some of my favorite blogs on this cloudy Saturday afternoon. I came across this posting on regarding the drawing of trendlines. After reading it a couple of times and trying it out with some charts to fully understand the point being made I wanted to post it so as to refer back to it in the future. I found it made quite a difference compared to the way I was drawing trendlines. The point being made is taken from the book "Trader Vic-Methods of a Wall Street Master" (emphasis has been added):
"For an uptrend within the period of consideration, draw a line from the lowest low, up and to the highest minor low point preceding the highest high so that the line does not pass through prices between the two low points." Here was my final result:

What I screwed up on at first was drawing the line from point to point but realizing that there was an instance of the line passing through price between the two points, as is instructed not to allow.

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