June 9th, 2009 – Flashing a warning

Wed, Jun 10, 2009

ASX Commentary

Our red warning lights seem to be doing their job. To reiterate these new warning flags; firstly the methodology is not disclosed at this stage but I will write up a note for the Resource Area at some stage. They attempt to signal when a move has extended well beyond its mean suggestive that a snap-back is probable. It is not related to our divergence indicator although can certainly be used as further confluence when that indicator shows bearish divergence. We need to see 5 or more consecutive red alert bars before we take note. In terms if ‘taking note’ we need to either assess whether a trade is worthy of actually taking or we tighten stops on open positions. As this is a new concept I have not as yet done enough research to validate its effectiveness.

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This post was written by:

Nick Radge - who has written 899 posts on The Chartist.


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