Issue:
November, 2006
Find
the Slam Dunks: Combine VSA with Technical Analysis
by: Todd Krueger
In
any competitive sports game there must be a specific set of boundaries
for the game to make any sense.
This actually is similar to the concept of a trend channel, also known
as parallel trend lines, in trading. Lets use the game of basketball
as an example. The game is played on a basketball court (playing field)
that has set boundaries that allow the referee to see when each team is
in the field of play or outside the playing field (out-of-bounds). If
a team goes out-of-bounds the other team gets the ball. The basketball
court also has an area around the basket called the paint. This is where
the highest probability shots are executed by the individual players.
The dunk is the highest probability shot that can be taken and this always
happens inside the paint, which is the high-probability scoring zone in
the game of basketball. We are now going to apply this same approach to
a price chart.
When a trend channel is drawn correctly, here is the information a trader
can find: The so-called playing field reveals:
The likely market trend into the immediate future,
The likely future support and supply lines,
Projected likely intermediate market tops and bottoms,
Projected future overbought and oversold price levels,
Future high probability buy and sell zones.
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