Morgan,
Not at all a bad idea. Have you tried On Balance Volume or MACD? They are supposed to do what you are attempting, and for longer time frames (daily or weekly) can actually work pretty well. I hope I'm not telling you something you already know, but when price hits a new high or low and OBV or MACD do NOT, there is a divergence (bearish for the new high, bullish for the new low). They are telling you that although the price is high, the support is low so expect a turn around. I haven't found this to be of any value for shorter time frames (intraday) and, of course, sometimes a price keeps on climbing even though the indicators are screaming FALL! FALL, DAMN YOU! FALL! Actually, that was probably me screaming, now that I think about it.
Still, figuring out when the "professionals" are bailing on a trend is a powerful piece of knowledge. Please let us know how your system works out.
Regards,
Paul Kaz
(Trying to individuate from Paul K) |
