The purpose of this Market Call section is to
educate readers in technical analysis patterns and indicators. As with all investment
information, you need to research information and consult your financial advisor before
initiating any strategies that are contained in Market Call.
Also, you must realize that as with all trading strategies,
opinions can change quickly depending on market conditions and developments.
This column tries to present historical examples, potential set
ups, and examples of entry and exit strategies.
Also, you must realize that as with all trading strategies, opinions can
change quickly depending on market conditions and developments.
This column tries to present historical examples, potential set ups, and
examples of entry and exit strategies.
Drawing Trendlines in a Support and Resistance Channel
Support and resistance can take many shapes. Sometimes it is a horizontal
line across support and many times it takes the shapes an angled channel.
The drawing of the trendlines is basically the same. You draw them across
the bottom support. Many times you will find the resistance trendline as a
parallel line.
It is a good idea for a trader to be drawing trendlines on their charts to
help them visualize these support and resistance areas. The chart below
does not have trendlines drawn on them. You should print them out and draw
your own.
Print out this chat and let's draw these trendlines on Cisco Systems,
(NASDAQ: CSCO).
By looking at he chart below, a trader would draw a Support trendline
across the recent support at 70 1/2 and across short-term resistance at 73.
CSCO has been in a congestion range over the past week.
The stock has been holding support, but also not able to take out new highs.
Today's range alone, September 15, 1999 saw CSCO testing the top of the
range at 72 � and closing at the bottom of the range at 70 �.
When a stock gets range bound the breakout can be good trading opportunity.
A trader entering a trade on a break should follow the trade with a close
stop. The stock should continue in the direction of the break.
As we saw today, with the range in CSCO, a clear break has not occurred to
either support or resistance.
Let the market tell you the direction of the break.
