Forum Archive Index - June 2002
Please note usage of the Forum is subject to the Terms & Conditions.
[sharechat] BCA Chart Update
While BCA has not yet broken above its 30 day ema, it closed on Friday
slightly above its trendline, and the +DI has just barely crossed above the
-DI. Superficially, these may appear to be Buy signals, but if we look more
closely, we will see that they are not. They signal the end of the downtrend,
rather than its reversal. It is possible to see this from the chart - these
signals were triggered by price action going sideways, as opposed to rising.
Rather than relying on such subjective indications, the ADX/ADXR components of
the DMI system are designed to quantify the "trendiness" of a stock. ADX/ADXR
values of over 25 indicate that a stock is trending, either up or down. (ADXR
is simply a smoothed ADX, and is therefore slower). During the six months of
the downtrend, BCA maintained an ADXR level of 30 or more. It is now at 25 and
falling - in other words, technically, this stock is no longer trending down.
These signals therefore would constitute a Buy to close out an existing short
trade, but not a Buy to enter a new long trade.
A number of different trading systems have developed around the Directional
Movement set of indicators. Another version, based on a system used by Dr
Alexander Elder in his book Trading for a Living, is presented at
http://www.incrediblecharts.com/technical/directional_movement.htm
Since BCA is no longer trending, it is no longer appropriate to use trend
indicators. This stock is now presumed to be in a trading range, until such
time as it either enters a new uptrend, or resumes its downtrend.
Phaedrus.
_____________________________________________________________
Are you a Techie? Get Your Free Tech Email Address Now! Visit
http://www.TechEmail.com
_____________________________________________________________
Promote your group and strengthen ties to your members with email@yourgroup.org
by Everyone.net http://www.everyone.net/?btn=tag
![GIF image](gif00565.gif)
----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/