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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: Smooth Drive who wrote (8566)	10/10/1998 5:19:00 PM
From: Bwe	Read Replies (1) \| Respond to of 34812

Short Term Downtrend Lines (STDL): Just a quick introduction, Eric, as I know the Aby book is on it's way, or has already arrived, and this concept has become an important staple on my p&f charts. Let's use Chase Manhattan's (CMB) p&f chart to illustrate how STDL's are constructed and interpreted. You can print out DWA's chart or use your own Chartcraft chart. Here goes. The big kahuna, the Bearish Resistance Line (BRL), is drawn in above the July $77 high. The BRL is now at $54. The main long term trend is defined by this nasty downtrend line along with an evaluation of the stock's RS chart which is currently in an O column though still on a RS Buy signal. The main trend is clearly bearish. Since CMB's fall has been so dramatic and the price has moved so far away from the BRL, we can draw a STDL above any two column of X's and O's that look like this: <-------Start your STDL here X <-----then here X O X O X O X O O Aby calls this an X,O pattern. We can drawn in a STDL in the column of X's above $57 in September. Then connect the lines at successively lower boxes at 45 degree angles as you would draw in any other p&f trend line. To quote Aby: "The principal objective of revised downtrend lines concerns securing earlier signs of price reversals. .....revised trendlines keep chartists apprised of current developments in the stock. Investors receive quicker warnings of price junctures and enjoy more sensitive charts." Back to CMB. STDL1 is currently at $44. We can draw in another STDL as another X,O pattern presents itself above the September column that topped out at $50. STDL2 is currently at $43 and that is CMB's current chart notation as well. After you've drawn in these babies you'll see that they've been the downtrend lines that have really been in charge of the stock since they were drawn in early September. Should CMB break these STDL's, then we can then say that a change in the short term trend is underway. Though still below the BRL, a trader might take a buy signal at $45 on the STDL break and look to make a few $'s to $50 -$55 depending on the market. OK, Eric, we can now add this p&f topic to our growing list of educational p&f discussions we've had over the last 6 months or so. Looking forward to your feedback. Longer term Revised Bearish Resistance Lines and Bullish Support Lines would be the next logical step in this discussion. You're the man! Your pal, Bruce