Swing and Day Trading by Thomas N. Bulkowski

Author:Thomas N. Bulkowski
Language: eng
Format: epub, mobi
ISBN: 9781118516997
Publisher: Wiley
Published: 2012-12-23T16:00:00+00:00

The Patternz program, available free on my website (http://thepatternsite.com/patternz.html), will calculate the chart pattern indicator for you. My website also provides daily readings for the indicator and has an enhancement to help determine how reliable the signal is (one to three up or down arrows).

THE SWING RULE

Stan Weinstein (McGraw-Hill, 1988) writes about what he calls the swing rule. The swing rule determines where price is going to encounter overhead resistance. In other words, where price is going to stop rising.

Figure 6.2 shows how the rule works. Measure the decline from peak A to valley B and add it to the price of A to get C. To put numbers to letters, the swing from A (high price) to B (low price) is 17.27 – 14.50, for a height of 2.77. Add 2.77 to 17.27 (A) to get a target of 20.04. In this example, C tops out at 19.50, so the stock misses its target by 3 percent. That is very good.

FIGURE 6.2 The swing rule uses the swing from A to B to predict C.

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