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Chapter 8, Part III. Channels. - Q&A

Discussion in 'Complete Trading Education- Forex Military School' started by Aldo Colombo, Jan 20, 2012.

  1. Aldo Colombo

    Aldo Colombo Corporal

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    One question: when you draw an upward channel, it's a long one in my case, so there are 4 or more highs aproximately on the same line, and 4 lows aproximately on the same line. But there makes some difference in angle wether you choose one or other point to draw the channel, which in turn leads to considerable difference at the end of the channel. I understand that one should choose the points that visually fit better the price action inside the channel. Still there's a case now where following these rules, I can draw two different channels that look very similar (one of them fits better at the beginning, and the other fits better near the end). Worth noting, though, one of them is drawn first following the highs and then cloning it to fit the bottoms; while the other channel is drawn first following the LOWS and then cloning it to fit the highs. Is there one "more" correct way than the other for UPward channels? Which one in principle should prevail?
     
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Aldo,
    Commonly the most recent price action is more important than elder one. So, it is better to look at most recent picks and bottoms first and then assess how previous ones correspond with them.

    But what is more important, I suggest you to read Tom DeMark book "Technical Analysis is new scienсe". There he explains approach how to choose correct points to draw trend lines, channels and so on. The feature of DeMark book - pure precise approach to some spheres of technical analysis, that previously was, say, a bit "personal". One of this topics is what you've mentioned - how to choose points for trend lines.
    I do not know will you like it or not, but this books is rather unique, and it may be great help to those who tends to single-valued approach to some flexible topics of Technical analysis.
    In general, his approach is based on gradation, ranking of lows/highs, depending on how much bars to the left and right, that have greater low/lower high. The more bars are - the more significant extreme. This leads to the point, that you can have some different trendlines of different significanty.
     
  3. Hamza Samiullah

    Hamza Samiullah Corporal

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    Nice work...
     

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