The power of two channels

We use the software package MetaStock 7.0 and create a display that will build the price band. For the construction of the indicator program allows operators to apply the Highest High Value - the highest value for the selected period and the Lowest Low Value - the lowest value for the selected period. The upper limit of the corridor will be showing the maximum price for a period of time (the time would start from the last candle on the chart in the past), and the lower bound, respectively, - denote the lowest price during the same period.

Suppose that, at Friday's close trader decided to analyze the price chart, using the proposed indicators. If the period he will choose five (the number of trading days in a week), the indicator on the daily chart to build levels, which were the minimum and maximum prices per week (minimum and maximum weekly candle), and actually - support and resistance levels for the five day candles. In this way, the trader carries information from the weekly schedule on the day. It should immediately be noted that such strict compliance is only possible at the end of the week, when the weekly candle is finally formed. On other days the line corridor track minimum and maximum for any past five days. However, you can use such a simple indicator for the analysis of general trends and determining your position on the general price trend. Much better results can be achieved using the graph multiple corridors of different time series. There is no need to strictly follow the long tradition of the use of standard time-scales: the month, week, day, hour, etc. Much more interesting to try to find the time series corresponding to the internal oscillation period of the instrument.

Consider the graph, which shows the two periods, 7 and 3. The blue line shows the minimum and maximum, the past week and a half, and red - for three days (polnedeli). The graph shows how one corridor winds inside the other. The movement resembles the river. For rapid strikes the one bank, change its direction and re-start from the opposite shore. Similarly, the behavior and prices.

Now you need to decide on what criteria to select periods. Let's start with an internal corridor. Obviously, the boundaries indicate the minimum and maximum prices for three days, and for the purposes of risk management - in absolute and relative values of capital changes over the three days. If a trader believes that the risk arising from the three-day interval, for it is too high and should use the period of not more than two days, it is better to track trends using a different approach [3].

Value 3 - the minimum effective value for the proposed algorithm. Exterior corridor depends on the cyclical tool. Option for him to be chosen in such a way that the line was like a step with some irregularities. For example, for the upper downtrend line exterior corridors should not have stairs, which would exceed the previous height. For QQQ-trust * Optimal values were 3 and 7. Excellent choice 4 and 7.