Everything I've read on trend lines, support and resistance lines, channels, etc, always shows them as straight lines connecting points on the chart. Also wave lines are drawn as straight lines from point to point. When I look at a price chart, it looks to me like the price action, highs and lows follow a curve or crescent shape, not straight lines. Does anyone know of models or links that talk about curved support / resistance / trend lines instead of straight ones? Thanks
Google inverted saucer. Also google fannning for first half of inverted saucer. For second hal,f google EV (Volatility Expansion).
Wyckoff suggested that S&R levels were more like ocean waves, his work would be a good place to start.
Wyckoff -- hmm, I read a book about the Wyckoff method a few years ago. It's interesting because you only see the curvature because the price chart is over time, but if you use a point-and-figure chart like in the Wyckoff method, the dropping-off volatility part would probably generate fewer boxes going sideways. I'll take a look. Also, thanks Jack Hershey for the inverted saucer and volatility tip. Now if only there were a model with a formula describing the curve and projecting where it would end a few bars to right (but that's probably asking for too much).
Nice pic -- upside-down, I guess they've got some strange coffee in that saucer. for inverted saucer though, I think more of a meniscus shape, like a short cylinder with depressions in the middle (uh oh, the D word again ...).
There are many models. Do not go to financial engineering, however. Behavioral finance is now getting "lessons" on the "permenance" of misbehavior. Some bad assumptions were made on non corrolation to set "control for relative measures; they are failing for the foreseeable future. This is a very neat time that separates the men from the boys. What I particularly like is the pending pseudo transparency that is in the works. By figuring out that the QE doesn't work; you get to see when and how the volatility Expansion of the Left trend line will be occurring. You can look back to JUN/JUL 2006 to see the Depression beginning. It was noted at the time using comparisons to Van Tharpe's tables on Bull and Bear markets. Currently you can check out CR of non credit card users and see that when the SOP of recording past credit failures is passed (anything before 2004 happening), ther is NO behavioral shift in those who could have that benefit on their CR. In effect, even those who do not buy on credit do not work to repair their CR's after more than 6 years. Economic society as we know it is continuing to cave in with no end in site. You can easily model ahead of time the way in which the "short" volatility will increase. by 15JUL11 and two more months ofcommentary, the Dodd Frank bill new regulatory requirements will be forecastable. You probaly know the old joke about when the "fit hit the shan". Those who use the premise of being on the right side of the market coupled with compounding profits are going to be in stark contrast to the CW models out there. As all th pension funds and other retirement packages go down the tubes, everything will become quite accelerated. the offest on bars is one thing in trends; when volatility is coupled to that on one side only (the dominant side), then a new sense of what trending really is can be understood. The usccession so far was to drive interst rates to zero. now printed money is being used to buy debt internally in an economic structure (QE). Even the name assigned is humorous. Devaluating our debtholder's currency is one thing. The "effect" of the fedreral management is to ignore the stakeholders who are voiceless. their money, saved for the future is being castigated the same way we are pushing our debtholders to take a royal screwing. I'm glad you noticed the situation. Making sure you and all of your relatives are immune could take some doing. There is an obligation to make money through price movement. Price movement always exceeds all other forms of capital utilization for building wealth. What if policy makers knew that? What if peoiple who use hedging knew that? what if money managers knew that? So they do not. Use the models to keep current. It doesn't matter if the model is messed up. As long a you know the basis of the messup, you create utility in applying the model. Once I was selling product of a major corp whose projections and payout were actuarily based. I could see the payout projections were creepy and where they were creepiest (beginning and ending). Naturally, I was FOS. Except for the fact that I was corect and could prove it. Ultimately, we had to drop that provider and go to a global company. We required more underwriting capabilty than their staff could turn out. Why? We found the hook, the product was free it turned out. People will sign up for free products that serve their needs. This is just a statement of the marginal analysis of opportunity by modelling. Today, it is possible to do marginal enconometric analysis of repeated tours of duty of families in the US. It looks like a tsunami will be hitting the US fairly soon. A colleague of mine enquired of the brass why a draft hasn't been in use. Obviously the answer was that the "public" wouldn't buy it. What did the public buy? Boy, are we going to find out.
Isn't that the flying saucer the Nazis were "rumored" to have built? (Notice the iron cross.) If the Nazis had even half the science fictional tech they were reputedly researching and/or building, we'd all be speaking German now.
Straight lines are Affine transformations that preserve two things: a) Collinearity b) ratios of distances No other transformation in 2-D satisfies preserves collinearity and ratios of distances. This means that no other type of curve other than a straight line can play the roll of S&R and of a trendline.