This is a technique that I have played around with but honestly don’t find that the use of this is by any means “Earth shattering”; not highly effective. The reason why I’m sharing this with you is because it is an extension of the above-mentioned concepts, and it can provide, somewhat roughly, a projected resistance / support.
Ok, on this chart you see drawn the resisting trendline with some pullbacks
and throwbacks. This is not what I’m trying to show you. Notice the other
lines. Basically I connected the supporting & resisting trendlines on those
minor trends within that larger trend. I’ve also connected a wave low to a
wave high which isn’t a standard way to draw a trend, but works for this. Of
course you can get many lines at different angles if you connect different
points, however drawing the minor trendlines tend to have a similar angle.
Notice that these lines together projected a range of resistance, which that big
wave ended up getting resisted by.
I speculate (meaning I don’t really know, but am just offering my
hypothesis) that part of the reason this sort of works is because it is a
projection of Fibonacci related extensions, considering you are
drawing a trendline along waves. Part of the reason for the
inaccuracy, I think, is because a tiny angle of variance gets magnified
over distance (i.e. if you were to shoot a gun at a target 100 yard away,
then were to move the front of the gun by only one millimeter then that
change in angle could make the second bullet be off the mark by a
considerable amount).
When do you use this? You don’t arbitrarily go connecting all the minor
trends all the time. When you see the market making a significant trending
movement then you whip out this tool from your trading toolbox to get a sense
for the potential resistance/support area.
How do you use this? Well you simply use this as a minor “reason” for
anticipating areas of potential support & resistance.
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