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There are plenty of technical indicators that you can overlay onto
your charts, be it your bar charts, candlesticks, you name it, so
many in fact I won't even start trying to name them all. However,
essentially what we are looking for is a trade. And if we are told
to trade with the trend then we need to find the trend so as to trade
with it. OK. But what trend are we looking for? Are we looking for
the trend of your friend? Or perhaps the trend of the brokers tips
that are coming in through on the fax? Well, really, what we should
be looking for is the Trend of PRICE. Have you read the William Gann
book "How to Make Profits in Commodities"? In this book Gann tells
us "Price tells the Trend".
William
Gann was a swing trader through and through. "the study of swings
in active stocks will convince a (trader) that far greater profits
can be made in swing trading than in any other way of trading". "…swing
trading…", mmm. "…far greater profits than in other way of trading…",
I'd like to see that.
Have
a look at this chart of MIM.
Insert
MIM chart here.
Note
the Triple Bottom at the end of the bear campaign. These Triple Bottoms
are a good indicator of a change in trend. Here's what Gann had to
say about these Triple Bottoms. "A Triple Bottom is the most important…you
will find that the greatest advances start form a Triple Bottom…"
The longer the time that occurs between these bottoms indicate a greater
importance of the campaign that lies ahead.
The
idea here, looking at the MIM chart, is to confirm a change in trend
from the bear campaign to the bull campaign as close to the bottom,
or Triple Bottom, as possible. Let's study the chart closely. You
will see that after the third bottom of the Triple Bottom the swing
chart makes a higher swing top, (note *1). This is your first indication
that the trend is turning. Now, "…the safest buying point is on a
secondary reaction…" Gann. A secondary reaction is, in this case,
a higher bottom to the Triple Bottom, (note*2).
What's
important to remember is that the earlier you get onto the swing the
more you'll make and the less you'll risk. HotTrader clearly defines
these entry points. I have noticed that two days after beginning to
write this article MIM has gone on to continue its uptrend. MIM has
now broken above its previous weekly swing tops, which is a good sign.
Happy
trading,
Solomon
Thallon
HotTrader, Australia
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