Forum Archive Index - November 2001

[Phaedrus <Phaedrus@techemail.com>]

 It is interesting to follow how a purely technical approach to trading handles 
unusual situations such as takeover bids, where prices suddenly rise in an 
unexpected manner. The most important issue is that an existing trendline is 
suddenly rendered irrelevant as prices rapidly move away from it. It would be 
unreasonable to expect any straight line to cope with changes like this - more 
dynamic trend indicators are required. Two examples charted below are Wilder's 
Parabolic Stop and Reverse, and a moving average. Note how they are able to 
adjust to the changed circumstances, continuing on to give Sell signals within 
a day of each other. In addition, a new (post offer) trendline has been 
confirmed, and broken. There is no downtrend yet.
  Regardless of what CEN may or may not do in the future, this has been a very 
successful technical trade, giving about 24% return in about 7 weeks.
              Phaedrus.

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