RULES FOR CHANNEL's
To create a down trend channel
1. 1st draw top line connecting highs
2. Then draw a bottom parallel line (copy). For the bottom line use the lowest part of the channel.
{we are assuming we only need 1 low point at the bottom}
To create a up trend channel
3 We first make the bottom line
4 Then copy it to the highest high in the channel
{Once again making the same assumption of one point}
his is a lot simpler and understandable and what I was doing, I hope I'm not cutting any corners here.
Correct me if I make a mistake.
In the next post by Nodoji, we see on the chart, some new concepts.
1. Support becomes resistance. This resistance/support line is identified by a horizontal line taken from the bottom of the previous apparent low.
2. Trend lines are then drawn to connect highs and lows during a horizontal consolidation. These lines are not parallel. This seems to be more accurate. In this case we have a "wide symmetrical triangle formation"
So Until otherwise corrected, I will say that:
{Whenever possible, we use non-parallel lines to make a triangle instead of a channel?}
3. In this triangle formation we are to assume that that there will be a significant break out. NoDoji waits to see which way it will break out. Once it is seen that that there is a failure to touch the the higher trend line trend line (TL). She then switches to a 1 min time frame and notices that it crosses the moving average and finds resistance there. As soon as she sees resistance with the 20 EMA she assumes that it will not pop back up. Therefore, it will have no choice but to cross the lower part of the TL which will cause a large drop of X magnitude
From this we conclude that
1. Support form a low can become resistance later on.
2 Triangle formations give us an idea of when there will be a break out as the TL's have an intersecting point. So, we know that a break out must occur before this point.
2 By viewing what is going on inside atriangle we can make an assumption about where the break out will occur.
3 If it price fails to hit a trend line that means that there is pressure for the stock to fall in the direction opposite of the untouched TL. It is unclear how important of an indicator this is. it may just be giving us a vague idea
4. since this triangle occurred in a down trend, it is most likely to fall down. watch movement in a 1 min chart to confirm (not hiting a TL, not hitting a 20-EMA,)
4 We can use a 20-ema as an indicator when we see price is finding support or resistance to it. It is unclear how important of an indicator this is. it may just be giving us a vague idea
5. When we have an indication of price movement that may not be a strong indicator we can look for another weak indicator to confirm our move
{Maybe they are both strong indicators and the EMA indication was used more for timing }
To create a down trend channel
1. 1st draw top line connecting highs
2. Then draw a bottom parallel line (copy). For the bottom line use the lowest part of the channel.
{we are assuming we only need 1 low point at the bottom}
To create a up trend channel
3 We first make the bottom line
4 Then copy it to the highest high in the channel
{Once again making the same assumption of one point}
his is a lot simpler and understandable and what I was doing, I hope I'm not cutting any corners here.
Correct me if I make a mistake.
In the next post by Nodoji, we see on the chart, some new concepts.
1. Support becomes resistance. This resistance/support line is identified by a horizontal line taken from the bottom of the previous apparent low.
2. Trend lines are then drawn to connect highs and lows during a horizontal consolidation. These lines are not parallel. This seems to be more accurate. In this case we have a "wide symmetrical triangle formation"
So Until otherwise corrected, I will say that:
{Whenever possible, we use non-parallel lines to make a triangle instead of a channel?}
3. In this triangle formation we are to assume that that there will be a significant break out. NoDoji waits to see which way it will break out. Once it is seen that that there is a failure to touch the the higher trend line trend line (TL). She then switches to a 1 min time frame and notices that it crosses the moving average and finds resistance there. As soon as she sees resistance with the 20 EMA she assumes that it will not pop back up. Therefore, it will have no choice but to cross the lower part of the TL which will cause a large drop of X magnitude
From this we conclude that
1. Support form a low can become resistance later on.
2 Triangle formations give us an idea of when there will be a break out as the TL's have an intersecting point. So, we know that a break out must occur before this point.
2 By viewing what is going on inside atriangle we can make an assumption about where the break out will occur.
3 If it price fails to hit a trend line that means that there is pressure for the stock to fall in the direction opposite of the untouched TL. It is unclear how important of an indicator this is. it may just be giving us a vague idea
4. since this triangle occurred in a down trend, it is most likely to fall down. watch movement in a 1 min chart to confirm (not hiting a TL, not hitting a 20-EMA,)
4 We can use a 20-ema as an indicator when we see price is finding support or resistance to it. It is unclear how important of an indicator this is. it may just be giving us a vague idea
5. When we have an indication of price movement that may not be a strong indicator we can look for another weak indicator to confirm our move
{Maybe they are both strong indicators and the EMA indication was used more for timing }
