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** Quick Chart Lesson: Trendline Break + 50%

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ClayTrader Member Level  Friday, 08/10/07 12:54:43 AM
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** Quick Chart Lesson: Trendline Break + 50% HOLD **

#1 Green Flag: Price closes ABOVE a key trendline... on chart below, the yellow line shows a key trendline, and the pink circle shows the break of the trendline...

#2 Green Flag: Where is RSI(5)? Make sure RSI(5) is above 50 (red vertical line represents where RSI(5) is on the day of the break).

#3 Green Flag: Does 50% of the big white candle "hold" (blue horizontal line)? As can be seen, the next day it DOES hold... it then holds 3 more times in the next few days...

#3A Green Flag: Does RSI(5) remain above 50 after whenever the 50% line is tested? As can be seen, the first 3 times 50% is tested, RSI(5) remains above 50... the forth time (pink horizontal line), RSI(5) drops below 50 and in the next few days the chart takes a downwards turn...

These types of set-ups can be known as "ATM Machines"... buy at the 50% line, sell w/in the next few days and then buy back again at the 50% level (remember, ask yourself: "Is RSI(5) holding 50?" before you buy back in)...

Questions? Feel free to PM me...



Need an Annotated Chart? Stop by my board -- http://investorshub.advfn.com/boards/board.aspx?board_id=8765
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