Millard on Channel Analysis: The Key to Share Price Prediction by Brian Millard

Millard on Channel Analysis: The Key to Share Price Prediction by Brian Millard

Author:Brian Millard [Millard, Brian]
Language: eng
Format: epub
Tags: Business & Economics, Investments & Securities, Analysis & Trading Strategies
ISBN: 9780857191502
Google: Q780rokNG7wC
Publisher: Harriman House Limited
Published: 2011-05-26T00:09:00.373522+00:00


Just to show how accurate these values are compared with the original cycles and random movement that were added together to produce this example, we need to know the amplitudes of these original components. These were as follows: 51-week cycle – 100 divisions; 21-week cycle – 50 divisions; and random movement – 40 divisions. We are therefore 80% correct with our estimation of our 51-week cycle amplitude, within 30% of the 21-week cycle amplitude and within five divisions or about 12% of the amplitude of the random movement. These are extremely impressive results for a graphical method, especially when we take into account our previous comments about the accuracy of our determination of the positions of the various cycles in time.

This gradual introduction to channel analysis has brought home the power of the method when applied to artificial data against which our results can be checked. Even though share price data may frequently contain many more cycles than the small number we have analysed in this chapter, and cycles which will also vary in both wavelength and amplitude over the course of time, the principles which have been discussed in the chapter are just as valid. The investor should now see quite clearly the relationship between the data and moving averages and the relationship between the data and the channels which we can draw on the data. As a result, the investor should now be in the position that he can understand which moving average or moving average difference should be chosen to highlight the particular cycles in which he is interested. No longer are these magic numbers conjured up by investment writers which appear to work most of the time. They are now fundamental values which have to be changed according to the circumstances.

In the following chapters, the investor will see exactly how powerful channel analysis is when applied to real stock market prices, and will also see the close relationship between channels and moving averages.



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