Seeing chart formations

[Joe Ross]

This question was sent to me from one of our students: “Hey Joe! I really have trouble seeing chart formations. I have to find a way to trade using indicators. I want to trade channel formations. Can you help?”

See if the following will help you: Every diagonal support trend line has a parallel resistance trend line that forms the trend channel. You can use Stochastic values to confirm buys made near support lines and sells near resistance lines, until a channel is broken on a second Close basis. A single Close violation, one that also closes below a two day correc¬tion, may also reverse the trading positions. When a trend chan¬nel line is broken with two consecutive Closes, a new uptrend channel may be constructed, unless two short term lower highs and lower lows have formed; then a down trend channel is also formed. The initial purpose trend line construction is to draw them at the sharpest possible angles connecting ranges and closes so they are broken until a longer term channel may be constructed that will hold for several weeks. Some support and resistance trend lines will not be parallel, and may intersect at "Turning Points." The turning point often functions as a time and price objective, but may be thought of as a price where the market will accelerate or reverse trend.