con't...
stockcharts.com[w,a]dicayymy[dc][pc5!c21!c50!c200!h.02,.20!f][vc60][iut!Ul14!Lc20!La12,26,9!Lh14,3!Lb14]
Note the important SELL signal that the stochastics & the RSI (RSI lower low last couple of days of that week), registered on or about the last couple of week(s) of Jan, 2001. What gives that SELL by the Stochastics, added validity (in my mind), is that the ADX(black, bold indicator), is flatlining around 12,11 or so. From what I have read, anytime the ADX is below 20, that indicates that an oscillating indicator such as the Stochastics, (is in control) & buy or sell signals should not be ignored. I realize that this is but one example, but it works beautifully here. Note also that the powerful thrust through 20 (week of Feb. 12, 2001) indicated in conjuction with price & -D1 movement, (-D1 crossed over the +D1 on or about the week of Feb 5, 2001), that a powerful new trend was about to be launched (in this case down). Time to short or stand aside.
To avoid the Bear (Bull) trap, boy even now I am confused!, on or about March 10, note that the Macd histogram signalled a buy (although the Macd is around -20), note the white candles, (although they are almost doji's), & finally note the -D1 did not indicate a buy (-D1 dropped to 32 but it never even came close to crossing over the +D1,
With the ADX, I believe that if one uses it on a regular basis, in conjuction with Stochastics & MacD & of course price action & volume, it may help to contain the inevitable whipsaws. ie: getting caught in various bull/bear traps if your long/short. With ADX, you will never get in @ the bottom or get out @ the top, but you will catch everything else in between.... IMHO
Note: I am just a newbie @ this so take it FWIW.
Regards,
Peter |
