Everything lags, I agree, very true. All indicators are really training wheels or braces. Years ago traders just read the tape.
I wouldn't say I'm fading trend lines out, I still use them but I do see a clearer picture with short, mid, and long term moving averages.
I drew channels on a stock yesterday where the 200 ma was riding the bottom of the channel.
Ultimatley what we're looking for is a s&r, a base to initiate a trade. Fib ret, trendlines, mov avgs, cardinal numbers and the like all provide clues to where the crowd is resting. We use what tool help us see clearer, alone or in combination.
As far as divergences in macd, I think Bob was looking at a chart of ITW a few posts back. August and September is a good example of the divergence between price and the indicator. I'm sure I would not have taken the trade, but those divergences do occur on much healthier charts. An aggressive trader may have seen a little support, a cardinal number and a small double bottom. |
