Sunday, July 31, 2011

Trendline Techniques

Hope all are enjoying the weekend. Some of you asked me to explain the technique of using permutations and combinations of Highs and Lows and then channeling out for intermediate highs and lows.

Please click this link to see an illustration with 4 major lines Trendline Basics

This is the Nifty EOD Chart from Jan '10 till date. I have drawn the 4 major trendlines as follows

Major High to Major High
Major Low to Major Low
Major Low to Major High
Major High to Major Low

Now all that one needs to do is use a slide-rule or setsquare-ruler combination and start fishing for parallel lines that connect intermediate highs and lows. For most liquid stocks and indices, parallel lines to the 4 major lines mentioned above will cover all swing tops, bottoms of major and minor levels and also give an insight to the geometry that the counter is following.

Wishing you all the very best in your attempts to try trendlines and channeling

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