Yes SpiderT, The chart TODAY is a perfect channel, what I meant is that YESTERDAY you couldn't use it to "predict" a top. Today you can draw a line from point 1 to yesterday top, Yesterday you couldn't, if not after the fact, or am I missing something? See attachment EDIT: sorry I meant point 2
Take another look at the attached chart. I drew the lines before yesterday's open. I saved the chart this morning and added the numbers before posting. Prior to yesterday's open, price held in the middle of the channel. At time of signal generation, price placed itself near the top of the channel. When I draw trendlines, I construct them in such a way using 'rays' - the channel lines continue to extend to the right and automatically continue onward in length. Using the points (1, 2 & 3) illustrated on the chart, one could have easily drawn in a trendline between points one and three, then created a parallel line tangential to point two in order to create the channel. Hopefully, that explanation provides some clarity. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=924338>
I should have provided a clearer explanation in my first post. Sorry for the confusion. - Spydertrader
Damn, as soon as you guys put up these posts, NTRI drops like a rock. I sold half @ 43.80 because I over-position myself. Parrallel lines are great but all support and resistance are support and resistance until broken.
Think of Channel Lines (or Linear Regression Channels or their brethren) as dynamic pivot points or dynamic support / resistance areas. Whereas normal S/R zones remain static, the areas of S/R along trendlines change over time. I often use, pivots, S/R and trendlines within the same chart. - Spydertrader