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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: sean sanders who wrote (10643)	2/19/2002 10:31:27 PM
From: KymarFye	Read Replies (1) \| Respond to of 19219

"1. Where do you get the 2nd target price from" It's just a rough approximation, made a little rougher due to the "imperfection" of the formation, of a second major Fibonacci multiple (2.618) of the distance from the neckline to the top of the right shoulder, subtracted from a theoretical breakdown point. The first target is a 1.618 multiple. I first ran into the projection method in Plummer's THE PSYCHOLOGY OF TECHNICAL ANALYSIS, and have run across other versions of it elsewhere. (Plummer believes that, because Magee and Edwards were ignorant about the Golden Ratio, they looked to the wrong indications for the their "measuring implications," and ended up a bit off.) Sometimes the method works terrifically well, but, as you might expect, there are endless nuances. Plummer uses line-on-close charts over relatively long time frames, and also doesn't deal much with equities. Others measure from absolute highs and lows, or concentrate on alternative levels that the market appears to "respect," or have formulae that allow special adjustments for gaps, and so on, and so on (Constance Brown's excellent on the so on's and so on's...). Here are a couple recent examples that worked pretty well - one includes the NDX where we are right now... To me, it appears to suggest that the current downleg may be about due for a bounce... or it may just give one reason why the down-move today stalled where it did... home.pacbell.net The projection method can also work very well intraday, simply measuring the distance from one reaction to another, then deriving a target for the next swing. Usually, if a projection (or its parts) derived from any of these means also happens to line up particularly well with apparently critical support-resistance levels, then I'll "go with it." I wouldn't be surprised if someone E-waver around here has a more refined method, and I'd be happy to hear about it. 2. The charting program is TradeStation, though I use ScreenPrint to get the .gif.