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To: Jibacoa who wrote (961)	6/6/2005 4:23:25 PM
From: Galirayo	Respond to of 3722

Trends ... Trend Lines - A Primer Purpose: To delineate, identify, and even circumscribe trends. A down trend is a sequence of lower highs and subsequent lower lows; an up trend is a sequence of higher lows and subsequent higher highs. (NB: the reversal of terms in the denotation is critical for proper understanding!) Rules: To identify correctly a down trend line, connect each lower high prior to a subsequent lower low. For an up trend, connect each higher low prior to a subsequent higher high. A trend line using any other data points is not correctly identified. (See example below.) eutrapelia.blogspot.com Questions: This comment, "the trend line of declining tops is important but not critical because it is incorrectly identified. It is, however, the trend line most amateur chartists would draw" resulted in two similar questions: 1) I am curious as to why you included it then, instead of identifying the correct trend line. 2) Why [it] is "important" but "not critical" and most importantly, why it is "incorrectly identified." Trend line 1 is the guilty party that sows confusion. The correctly identified trend line is #2 because it conforms to the rule: it captures each lower high prior to a subsequent lower low. (Note that other declining trend lines from the same starting data point - the all time high - could and would have been drawn.) Each trend line remains in force until the low trade is in place. Thus, line 1 is incorrectly identified because the low trade at B is higher than the low at A -- the decline appears complete. A new trend line should be sought; if not up, then at least sideways -- because the earlier trend (down) is complete. At best, Line 1 is merely important, and certainly not critical. Why show it? Because it is, as mentioned in the original post, what most participants would draw (including Allan's software) as a trend line delineating the down trend. And I want to know what most participants will do, whether their efforts are correct or incorrect. This one looks like We Should Be Looking for a New Trend. stockcharts.com[w,a]dacayiay[dd][pb50!h.02,.20!f][vc60][iut!Ua12,26,9!Uv25]&pref=G Ray