Thursday, August 24th, 2006
Three trend endings you need to know
Last week we looked at the only sell rule CANSLIM and breakout traders really need.
But sometimes theory doesn’t always work in practice!
While the principle is the same, here are three trend endings that you should also be aware of. Colin Nicholson talks about them extensively in his book. The first chart is the example we looked at last week.
Below the stock keeps failing to make new highs and gets stuck in a trading range. The sell signal is given when it falls below that range.
Sometimes the stock doesn’t hit a new high before triggering a sell signal. In the case below the stock hits high, then corrects and forms a base/trough, but the next rally makes a lower high. The sell signal is given when it then falls below the base it just created. We recently looked at the 1-2-3 trend ending, which is an interpretation of this.
Word Count: 148. This entry was posted on Thursday, August 24th, 2006 at 7:10 am and is filed under When to sell. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
