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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude
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To: Dave H who wrote (9942)1/2/1998 2:45:00 PM
From: Esteban  Read Replies (2) of 79180
 
Dave,

Doug's post 8358 on this thread got me started working with 5 minute charts to establish support points for active cats.

It's kind of difficult to discuss these concepts verbally, but here's an attempt. Doug talks about using accelerating trendlines, which I would take to mean in this case that each new trendline is actually only 2 days long, drawn from the lows of the 2 previous days. This works well for many situations, but it is lacking when the cat gaps up at the open or even opens at the closing price after a strong day during the bounce, and does not retrace during that day. This creates a trendline that will automatically be broken on the next day's open in most cases, just because of the horizontal spacing of the bars between days, and no negative price action in the stock at all.

My feeling is that accelerating daily trendlines are not precise enough to monitor the action of such a short term play. I'm trying to develop methods that reduce the subjectivity of the exit to an acceptable level, and yes, to avoid premature exits while protecting profit. It remains to be seen whether we can improve on the original accelerating daily trendline concept or not.

Esteban
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