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Strategies & Market Trends : Analysis Class for Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (757)	4/12/1998 6:03:00 AM
From: Arthur Tang	Read Replies (3) \| Respond to of 1471

A lesson in technical analysis by drawing trend lines, short term and long term? What can volume guide us? Let us take a popular small stock CCUR. In technical analysis what the company does, does not matter. First take a look at Yahoo big one year chart. You see an upward trend from August 1997. You see the trend started with one day volume of 3 million shares, then recently a 4 million share volume day. These two events guided the present trend. We also see waves, which are the curves going up then going down. First, we do long term trend lines. You draw a line on the support level, using two points from the right of the chart that are the lowest. that intersects the end of the chart today at $2 3/8. Then you draw a resistance level line from the right using two points that are the highest, that intersects the end of the chart at $3 3/8. So, the price of $3 1/16 which closed Friday last is in the trading range between resistance and support($3 3/8 and $2 3/8). Next, we plot the short term trend lines, starting from the day the 4 million share volume day. The two lines will intersect in the future at $3 1/2. Market is going up. This is not surprising because, it follows the same pattern at the beginning of the 3 million share day. This behavior is based on the human nature of the market makers and their customers. As long as there are no changes in market making or customers' perception; short term trend lines if plotted each and every day will shift the trend, and give you an idea of a direction where the price of CCUR will move to. If it goes lower, the support trend line will slope lower, projecting the price target intersection further out into the future. If it breakouts, the resistance line will point higher, and the support line also will slope higher. Good luck with your technical analysis from now on. Don't forget you need the volume chart as well in trending.