Forum Archive Index - December 2001

["trader 100" <trader_100@hotmail.com>]

Phaedrus,

I have been learning a lot from your posts but I have some questions.  Could 
you or anyone else more knowledgeable than myself kindly consider the 
following (forgive me if my questions have already been covered – I have 
scanned all your posts and can’t find answers but it is quite possible that 
I have missed something).

There are several references in Pring’s books to trendlines being considered 
as zones.  The implication being that a trendline doesn’t necessarily need 
to be touched for it to be confirmed.  I notice that you are very careful to 
draw trendlines that touch the price action when you are using closing price 
charts but several of your trendlines on candlestick charts seem to be 
working on the “zone” theory.  Could you please reconcile these approaches.  
I notice in the WHS candlestick charts 
(http://www.sharechat.co.nz/archives/2001/08/msg00369.shtml) you have joined 
the highs on the candlesticks rather than the closes.  What is your 
rationale for this?  I have always thought that the close was the best price 
to use in trend analysis.

I am also interested in your philosophies regarding trading trendline 
breaks.  There seem to be at least four approaches:
1. Waiting for a close below an upward sloping trendline before selling eg. 
http://www.sharechat.co.nz/archives/2001/08/msg00328.shtml
2. Waiting for a break of a downward sloping trendline AND for the stock to 
be in an uptrend (defined as a higher low being followed by a higher high) 
before buying eg.  
http://www.sharechat.co.nz/archives/2001/10/msg00448.shtml
3. Waiting for a break of a downward sloping trendline AND for a long lower 
shadow (buyer support), and a close at the high for the day. (White Closing 
Marubozu) before buying eg.  
http://www.sharechat.co.nz/archives/2001/11/msg00505.shtml
4. Waiting for price to move a pre defined distance from trendline (Pring 
advocates 3%)

Can you please reconcile these approaches.  Do you vary your approach based 
on recent price action in the stock? Or some other indicator? Do you use the 
same approach for both buying and selling?

Regards,

Trader_100



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