danny wrote:

QUOTE:
yes it is... Volume to the downside makes it more significant.. When we say that.. we are referring to the lowered average cost of supply..
red is an indication of sell off. That means the bar ended with the close lower than the opening price.
Hope I was able to help.


happy charting!

Thanks for your response Danny!

A related question, we know how to calculate target price - based on the chart patterns, but how do we calculate support price and how do we calculate trailing stops in subsequent sessions in our trading plans? do we do the following:
a. pick the latest low as support price
b. pick a perceived ave. low over lets say the last 3-5 days as support price
c. use ATR - i read somewhere they use ATR - from what i remembered this is the measure of volatility? of the last 15 days i think and multiply it by 2 to get support price

reason I am asking this is i usually suffer a big loss when i set support price too far, but gets shaken off if i position stops too close . Is there an optimal way to set support price?

thanks again for the patience

setting stops is a risky business.. hehehe.. risk.. that's what it's all about. But technically speaking, if a cut below support level is too deep a value, I'd recommend looking for a short term trend line. otherwise a previous low that holds for at least 2 days can also be used. Again, I would like to remind you that support and resistances with in periods of consolidation can or cannot be retested. when the price is moving sideways, anything goes. It is our recommendation therefore to stay on the sidelines when this happens.

During trending situations, its very easy to plot an accelerated trend line and any violation of that is worthy of stops. a trending support line is usually used for trailing stops.

Hope I was able to help.

Hi Danny
Thanks for the response. Yes i guess staying out during sideways movement is the most prudent thing to do but this always tests our discipline hehe.

thanks
jon