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Hi Tom
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> From: Tom Nagle <tnagle@xxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Gen: Dow Theory Applied
> Date: Tuesday, July 21, 1998 6:39 PM
>
> This brings me to my first problem - what is a high (low)?
> I've asked many people but not received a satisfactory answer. It seems
> everyone knows what they consider a high or a low when they see it...but
> they can't give a definition, and they look at me as if I'm nuts when I
> ask the question.
> For instance, I've seen it suggested that you can define highs & lows by
> using a moving average and the highest price achieved whilst above the
> MA is a local high and the lowest low reached whilst below the MA is a
> local low. Comparisons of highs & lows can be made thereafter.
>
> This seems to run into problems when there is a long consolidation. Also
> after a steep rally it means that the last significant Dow support is
> too far away to be of practical use and I was wondering if other RTers
> had tried to find a methodical approach to defining highs & lows and
> what conclusions had been reached.
To place your question in my words, I want to have some means of
identifying moves of a like magnitude. For this purpose, I use a
variation of swing charts of my own design. This enables to me to know
that a high will form if the line turns down to a certain price level.
In addition by defining the magnitude of the swing, I can define the
swing's (trends) timeframe. An 18 day swing defines the monthly
swing (roughly 18 trading days in a month, allowing for holidays);
a 5 day swing defines a weekly trend; a 13 week swing defines a
quarterly trend etc.
Using swing charts up and down trends are easy enough to define. So
far as congestion is concerned, I use the Wyckoff terminology. You need
a climax, reaction and test - a W or M.
regards
ray
R Barros
101/25 Market Street
Sydney NSW 2000
Australia
Voice: 61 2 92673470
Fax: 61 2 92673478
E-Mail: rbarros@xxxxxxxxxxxxxxxxxx
swing charts. I know a high has formed once a
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