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Part 3/3 - repost of older mail from last year
A reply to a reaction on the formulas in Part 1/3 and chart in Part 2/3.
The here attached chart is(was) an update of the older chart in Part 2/3).
The AEX index managed to reach the 1323,65 level (All Time High on July, 21st 1998)
(not seen on chart and equivelent to now €600.65)
Regards,
Ton Maas
ms-irb@xxxxxxxxxxxxx
Dismiss the ".nospam" bit (including the dot) when replying.
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----- Original Message -----
From: A.J. Maas
To: David.Castley
Cc: Metastock-List <metastock@xxxxxxxxxxxxx>
Sent: vrijdag 19 juni 1998 0:11
Subject: Re: Metastock indicator code for dynamic zone indicator
>With regard to this email, I understand that the trend, support and
>resistance levels on the middle chart are manually drawn, but how does one
>interpret the two RSI inner charts? Any help much appreciated.
Hello David,
Correct that you too noticed the complexity of 'reading this altered RSI-indicator'
when explained by the "SC/TS-RSI-DZ2 Note's".
However, for this one too, the normal basic RSI functionalities do apply.
(available at http://www.equis.com and go to Support/Formula's Page)
Interpretation:
Read up on these Basics, for functions and interpretations (among other indicators) of :
-the RSI (=oscilator)
-the PriceOsc
-the MA's
-the Trends
-the Trending&Trading Prices
-the " & " Bands incl. the Bollinger Bands
f.i. in books like "TA from A to Z" by S. Achelis, electronicaly free available at:
http://www.equis.com/sales/catalog/eduprod/indextaaz.html
The Bottom-inner window(just for comparison):
-Consists of:
-the RSI(14) indicator
-the DynaZones with RSI(9) as 'underlay'
The Top-inner window:
-Consists of:
-the RSI(9) indicator
-the DynaZones with RSI(9) as 'underlay'
-straight horizontal lines at 70-50-30 for comparison with the DynaZones' Bands, e.g. Bands
showing the 'real' true OB/OS 70-50-30 levels
-DMI systems' MA's. The DMI systems' (Directional Movements, DMI+ minus DMI-) MA's(20-9)
were displayed to show 'steady' ST-Trends when in a LT-"Trading" mode(1990-1992);
for these I used the following formula:
formula name: "DMI20SMA" :
Mov(PDI(14)-MDI(14),20,S)
{additional 9 day SMA(MS build-in) of the above as the tricker line}
For additional charts' readings, in general:
-when in "Trending" mode ;
use 'extreme' Outer Bands as OB/OS levels in combination eg with price MA's, 50/20 and 20/5
-when in "Trading" mode ;
use 'average' Inner Bands as OB/OS levels in combination eg with PriceOsc,15/10/5
Note:
Notice that when the markets are far from TRUE LT-Trending, the Outer Bands will not always be
reached by the RSI(both 9 and 14 days).
For this as a Basic rule:
When Price's previous MAJOR HIGHs or LOWs are NOT surpassed, then LT-TRENDS (the Long
Lasting ones) are NOT present/developing, generaly speaking NO TREND, thus TRADE.
This does not always apply for ST and MT-Trends, as they arise 9 out of 10 TIMES in the
SIDEWAYS' markets(Trading), e.g. in LT-TRENDING markets, the SIDEWAYS'
TRADING markets do frequently ocure as ST and MT-Corrections.
(These Corrections 'set' the Price's Trading Zones with former (Major) HIGHs + LOWs as borders)
In General:
-detemine the markets' status(TREND or TRADE)
-look for divergences
-use the basic ob/os buy-sell interpretation of the RSI etc.
-OB/OS zones then, can be 'just' penetrated, but this can also last for months(1-4), depending
on TRENDS' strength(when available)
-as with any indicator, in combination(s) with several other indicators&patterns will give the best results
(then best used f.i. with MA's and their Golden & Dead crossings!!!)
Comment on newly attached 'up-to-date' AEX-chart:
Notice the early warning(OS) in Feb98 and 'drop'+'pullback' to the Mid Band(Dyna50 level)
in Apr98 and this 'correcting stage' is still present with ST-TRADE levels between 1220-1100,
confirmed by the narrowing of the Bands(=sideways) + they are slightly moving lower.
NOT visable marked are the H+S's Continuation Pattern(upside down, borders at 1203-1104) and
an Upwards-Trend-Triangle(borders 1225-1148(=also Triangle's rising Trend Straight Support-line),
leaving an Aug98 Target of 1302 ((1203-1104)+1203) and ((1225-1148)+1225).
ALL IF:
-Intrest rates don't rise extremely (so far no rises)
-Bonds don't crash(seems like they will be 'soft-landing')
-Asian turmoil doesn't turn into a crashing of Co's-profits(so far only the 'dust-bins' are caught
by the 'Asian-flu')
-Present progress in outperforming continues(so far no worries about the 'underlay'-Trend)
Current:
1. Up-Trending are: German Dax, French CAC, Belgium Belfox, Spain IBEX, US DJ UtilitiesAve
2. Runner Up's are: US S&P500, Nasdaq Comp, DJ IndustrialAve, DJ TransportationAve,
Canada TSE35, Italian MIB, Greece GSI, Finish HEX, DJ Euro STOXX 50,
Denmark KFX, Swiss SMI, Sweden GEN, Dutch AEX, UK FTSE100,
Portugal BVL, FTSE EuroTOP100
Nice HOT summer ahead,
Regards,
Ton Maas
Attachment Converted: "c:\eudora\attach\DynRSI-S&R-Jun981.gif"
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