Learning to read Price Action with P&F Charting

[dentist007]

nas 100 has definitely been outperforming the dow recently
cahrt is nas 100 relative to the dow.since jan 07.been outperforming by a few percentage points recently
dow ,s&p500 been sluggish recently
please let me know if you disagree

 

[rtr1129]

Quote from CWU:

If you follow this trendline algorithm you’ll do just fine. I didn’t invent it but it’s in my own words. Master this, and then you can add the secondary types of trendlines.

1. Let's call the Bullish Support Line the BLSL, and the Bearish Resistance Line the BRRL.

2. Begin by always going to the hard left edge of your data (where the chart begins). What is the first signal that forms? If it's a buy signal (double top) then we are going to go to the bottom of the lowest column of O's to the left of that signal, and start a BLSL. If the first signal is a sell (double bottom), then go to the top of the highest column of X's to the left of that signal, and start a BRRL.

3. From that point on (either the first BLSL or BRRL) there will always be a trend line in place. The trend will either be positive (trading above the BLSL) or negative (trading below the BRRL).

4. When a BLSL ends, a BRRL begins. When a BRRL ends, a BLSL begins.

5. A BLSL can only end when a column of O’s penetrates it, and it's on a sell signal. Penetration means the column of O's not only landed on the BLSL, but went at least one or more boxes below it.

6. A BRRL can only end when a column of X’s penetrates it, and it's on a buy signal. Penetration means the column of X's not only landed on the BRRL, but went at least one or more boxes above it.

7. If a BLSL is the active line, and a column of O's come down and stops directly on the BLSL, and then reverses back up, then drop the BLSL down one box so it's directly under this most recent column of O's, and that is where it will continue from.

8. If a BRRL is the active line, and a column of X's rises up and stops directly on the BRRL, and then reverses back down, then raise the BRRL up one box so it's directly over this most recent column of X's and that is where it will continue from.

Okay, I gave it a try. See attached chart. I included the double top/bottoms and connected them to the trendlines. Let me know if that's correct, incorrect, or just overkill

 

[HooLee]

Quote from rtr1129:

Okay, I gave it a try. See attached chart. I included the double top/bottoms and connected them to the trendlines. Let me know if that's correct, incorrect, or just overkill

You should start you first down trend line at 17.5

These pages may also help you: http://208.149.108.62/cgi-bin/foxweb.exe/fwuniv?email=&lesson=1&page=7

 

[CWU]

Quote from rtr1129:

Okay, I gave it a try. See attached chart. I included the double top/bottoms and connected them to the trendlines. Let me know if that's correct, incorrect, or just overkill

What is the symbol of the stock you are charting? I'll post a correct chart with just the BLSL and BRRL.

 

[rtr1129]

Quote from CWU:

What is the symbol of the stock you are charting? I'll post a correct chart with just the BLSL and BRRL.

I believe it's AMD, from about 1 year ago. It was a chart that HolyGrail posted toward the beginning of this journal. But any example you are willing to provide would be much appreciated.

 

[CWU]

Quote from rtr1129:

I believe it's AMD, from about 1 year ago. It was a chart that HolyGrail posted toward the beginning of this journal. But any example you are willing to provide would be much appreciated.

Okay, here's AMD with just the BLSL's and BRRL's. You can see that one of them is always in place.

A P&F chart is either bullish (on a buy signal) or bearish (on a sell signal) and the trend is either positive (trading above the BLSL) or negative (trading below the BRRL).

Now you pick a chart and put them in place.

 

[CWU]

Same chart but I've added a few secondary TL's like the Bullish Resistance Lines and Bearish Support Lines. The strongest ones are always the first or second ones of the bottom or a top. They do capture channels very well.

 

[rtr1129]

Quote from CWU:

Okay, here's AMD with just the BLSL's and BRRL's. You can see that one of them is always in place.

A P&F chart is either bullish (on a buy signal) or bearish (on a sell signal) and the trend is either positive (trading above the BLSL) or negative (trading below the BRRL).

Now you pick a chart and put them in place.

Okay, I think I'm getting it now (or getting closer). Here's a chart of AMZN.

 

[CWU]

Quote from rtr1129:

Okay, I think I'm getting it now (or getting closer). Here's a chart of AMZN.

First, you looked at the stockcharts P&F chart and that’s a good thing because I provided their code pounder with the exact algorithm I posted here. (This was some 5 or 6 years ago.)

I see that you added 4 superfluous secondary BLSL – but for what reason?

First, master the Bullish Support Lines and Bearish Resistance Lines. Then, the Bullish Resistance Lines and Bearish Support Lines. Then, short term lines

Take any chart in Bullseye, remove all the trendlines, go to the hard left and start drawing in the trendlines. Simply follow the algorithm. Post that.

 

[rtr1129]

Here's one for AES. I wasn't sure about the green lines. Should they not be drawn because they are not the primary trend? Would it be accurate to say that you want the minimum number of trend lines so that there is at least one trendline covering every column?