| CHART 2: ADD A COUPLE MORE INDICATORS.
Here, the parabolic indicator was used. The exit
signal was given one day after the ADX gave its
exit signal. |
The very basic trendlines that are drawn also could
have signaled the end to the uptrend. Note that the
price accelerates above the upper channel line in the
final extension of the uptrend, tests back to the break
and then goes on to make new highs. The subsequent price
decline back below the upper channel line would then
signal the end of the up-move. As well, another support
line similar to the parabolic could also be drawn, and
its breach would have been the earliest signal of the
end of the upmove.
What About Short-Term Trading?
The same tools outlined above can be used for short-term
decision making, even in markets that are trading sideways,
or so-called trendless markets. While the market may
not be trending in a long-term sense, there are multiple
smaller, short-term movements taking place that can
be exploited. (One caveat must be noted, though: traders
need to be aware of what is happening in the bigger
picture. If shorter term ADX readings indicate a trending
market, traders must be circumspect in initiating trades
that are counter to the larger, daily trend.)
Continued
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