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Trend Change and Predictive
Techniques
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The
indicator on the chart above is an example of a technique that can be
used to anticipate price reversal levels. Doing so enables you to sell
in the face of market strength and buy weakness before a reversal
occurs.Predictive methods can be refined by combining them with other confirming indicators. More info is
given on the Tips
Page or look at the GRAFster6 Help file for a detailed
explanation.
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The yellow lines lines are
smoothed volatility bands. They expand and contract with changes in the
standard deviation of bar to bar price changes (i.e. volatility). These
bands can be interpreted to mark possible trend change levels. That is,
DOWN trending
prices tend to reverse when price (a close) breaksout above the
upper band.
Likewise, UP trending prices often reverse when price (a close)
breaksdown below
the lower band.
The colored horizontal lines mark possible price support and resistance
levels (ala the Edwards and Magee major trend definition). UP trending prices show green
support lines and
DOWN trending prices show red
resistance lines. Breakdowns below support and breakouts above
resistance suggest a trend change has
taken place.
Consider using these trend lines alone or together as confirmations of other
signals, like the 'Ceequential' Top/Sell on the BP chart
above. |
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Last updated
15 May 2010
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