Mathmatically, howto define Trend, Reversal, Resistance, Support?

[TSGannGalt]

Simply... it's been discussed in similar topics between Quantitative Analysis and Technical Analysis.

Quantitative Analysis is objective.

Technical Analysis is subjective.

- Generally, trend is subjective, as mention on previous posts above.

- Reversal is simply a change in the trend's direction so this becomes subjective.

- Support is a micro retracement from the macro trend, and this also becomes subjective.

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So the first step is to declare what a trend is. For example:

if (High = Highest High of the last 30 days)
Trend = up;

From here...

Reversal would be Low = Lowest Low of the last 30 days.

Retracement = High != Highest High of last 30days && Low = Lowest Low of the 15 days...

There's no right way. One way to find these are to run some tests to find a "optimal" parameter.

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Culture makes up the morals. Morals make up the Laws/Rules.

Cultere is diversified.

 

[jack hershey]

Quote from qll:

in chart, it is easy to use eyes to pick a trend, reversal. draw a line. or find a resistance. how do you define those mathmatically purely based on numbers, not graphs?

Failure tests are best and simplest.

The four topics you list can be done in two groups.

Group trend and reversal and group R and S.

R and S are the same thing.

The failure test for trend becomes the R and S test.

To obtain the failure test for trend, just use an optimizing test for reversal.

Tho optimize reversal you use a too early too late convergence to optimum test.

So lets optimize the reversal and everything you want is achieved.

Since you want this for price, you use the leading indicator of price which is volume.

You can use a portion of a periodic function to perform this optimization. The accuracy is related to the extent that you consider the number of elements of the periodic series you chose.

It you prefer, at this point, you can transform the periodic series into a power series.

In any case the pragmatic aspects just deal with where you truncate the series.

Determining the phase angles of the terms relative to one another is not an issue.


As an alternative, you can use MLR.

The simplicity here comes from using angular velocity comparisons.

For MLR the key aspect is that MLR lines no matter how long in duration all end in the present. This is a vertical line math wise.

Three mlr's are required and they form intersections (with each other in pairs of lines.

Use the angular velocity of the pairs intersections (3 angular velocities) and, agian go for an optimization of the 2nd derivative of the angular values.

From this you have the reversal measure which has a time dimensionality and from there plugging in the time value you get all three of the other values sought.


This all makes it very very easy to pick off most all the fruit and specifically the large low lying fruit.

As you can see these are easy solutions that undergraduate math majors can do.

You are, however, nt asking the key questions for making money.

This is just run on copy that took about 8 minutes to type while dicussing the Suns game 157/160 with Liz.

ET is not into math it turns out and that is just fine. Optimizing making money is not a very difficult game to play but it takes years to get across to people.