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Hi RT'ers
>Regarding Guppy's techniques, what are countback lines?
>
"Countback" lines are a little technique he uses that is a modified
version of someone else's technique.
Essentially it is a technique of estimating the short term (over a few
days) support/resistance levels.
Basically the method is (to pick the end of a downtrend to buy a stock):
1/ When a new low selling price is hit, draw a line from the top of that
day's price bar across to the left, until it hits a bar whose high is
above that line.
2/From the top of that bar draw another line to the left, until it hits
a bar whose high is above that line.
3/From the top of that bar draw a line across to the right.
The "Countback" line in step 3 is effectively a short term resistance
line.
When the price is going up and the CLOSE is above the countback line, it
has broken the short term resistance. This is ONE of the triggers for a
buy. It would need to be confirmed by other factors such as a point and
figure chart breakout etc.
He set the number of times you draw the line to the left by
experimentation - the whole idea of the technique is to fine tune your
entry.
The technique can also be used for going short, but this is not used in
Australia (generally speaking).
Anyway, I'm probably not doing justice to all of this technique, as
there are further refinements he uses.
Cheers,
Craig.
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