Drawing trendlines, opposite theories?

Discussion in 'Technical Analysis' started by Alexis, Sep 6, 2009.

  1. Alexis


    Hello everyone,

    Many of you have probably noticed it, there seem to be two major ways of drawing trendlines in the technical analyst community:

    1) The "re-drawers": The re-drawers trace a new line joining their initial point to any new high/low that has just formed.

    As a result, they tend to have very crowded charts with many, many possible Support/Resistance points.

    The re-drawers are smart, very friendly people, famous for their love of dogs and children.

    2) The "paralellics": The paralellics have a different view: they want to find the right trend line, the one that truly defines the current trend, and then draw parallel lines with the help of previous/later high and lows.

    There can be different sets of parralels for different trends of course, but charts are often cleaner.

    Paralellics are clever, caring people, renown for their good looks.

    So, which crowd is right when it comes to trendlines?
  2. Eight


    The parallel line along with some looks at the volume of the bars in the channel can help to define the trend... it's sort of like feedback to the real trend... or is the trend line feedback to the real market activity.. or is the accum /dist... oh never mind...
  3. ehorn


    IMO, it is the crowd that incorporates Volume.
  4. Alexis


    guys, thx for your inputs.

    Both methods can incorporate volumes in the analysis process.

    I can not emphasize enough on the fact each metods will give VERY different trendlines, resulting in very different expected S/R zones.

    One must be wrong.
  5. can you post a quick example of each, so we all are conceive the same concepts?
  6. ammo


    if u noticed in this rally since march, many times on a pullback the mrkt reversed to the upside before reaching support, this in my opinion is the task force working to bolster our market and avoid a collapse, This serves 2 purposes, one the pushing up of the market , and two, it repels the action of sell stops getting hit at or below these trendlines, causing the market to drop. Now that we.ve gotten near the 1050 spx gap level, they are holding it below for the same purpose, there are a lot of profit taking sell orders sitting up there. Regardless of where you draw your trendlines, u need to be vigilant of the prevailing forces whose main task is to prevent financiial collapse
  7. It's interesting that your observation of two different techniques is embedded with personality characteristics.

    If one knows the method of an adversary, and the probable course of action taken from bias, I'd be inclined to say that qualifies as an edge.
  8. ammo


    the edge i am seeing is that this rally is nothing more than an anti selloff rally, so every up move is met with a 10-15 point selloff, so if you were shorting it ,you could average at the upper end of the rally and bring your position in for a small loss or even profit and remain short the whole way. The question is, is that their position or is one just curve fitting his position