Technical Analysis Training Course – Will the Trend Continue or Will it Stop Part II

In Part I of our technical analysis training course series on Will the trend Continue or will it stop? we talked about the need for two kinds of tools to measure the strength of a trend , which will help you figure out if a trend is going to stop or continue . Tool number one was setting targets properly according to the market structure’s higher time period of resistance and support.

Momentum tools are the second type of tool needed . You should use momentum tools to make the right judgements and apply them to a smaller timeframe than the one you’re trading … essentially if you’re trading on a daily chart, trying to pick of the high or low of the day with your trades , then you would be looking at an hourly or half-hour chart to give you support in your trading decisions intraday .

What are momentum tools ? one of the best is a short term moving average ; use three moving averages in a channel system and you’ll have a matrix created, which you can use to measure the strength of the trend against . There are many channel systems but one of the best is the Drummond Geometry system (you should have learned this in your technical analysis training course) which as the center line uses a moving average that is short term of the average of the close, high, and low of the last bars that have been completed , projected onto a bar in the future . Added on to this are two channel bands based on similarly managed averages of the last three pivot points . Great market strength judgments can be made by looking in relationship to this channel system at where sequential closes occur.

Market flow should be established by using price strength aspects to measure , such as how close the close of the bar is to the low or high, the difference between the open and the close, how large or small the range of the bar is , and the progress that the bar is making through the matrix of resistance and support you have.

Yet another tip to remember: Since every time frame has a support and resistance system , watch how easily or with how much difficulty the lowest timeframe that you monitor breaks its own resistance or support in a trend . The more easily you see this happen , the underlying trend is more likely to be robust . If there is an uptrend, support will hold if its close to the bar’s low, and resistance nearby is more likely to break easily. Low time period resistance breaking and support holding – this is a very reliable sign of the strength of a trend .

These tips should help your stock trading strategy become a consistent winner as you learn how to know when trends are running out of stream and those that may go on for days, weeks, or months . A quality course on technical analysis training course can save both time and money for you by providing you with the tools needed to make these distinctions, which are so important .