The Chart Pattern Trader

Ron Walker Has Had Over 200 FollowersHas Been a Top Public ChartList for Over 1 MonthPrevious "Hall of Fame" ChartList Author Rank: 8 Followers: 253 Votes: 287 Years Member: 10 Last Update: 30 September 2016, 4:52 Categories: Trend Analysis
Chart Patterns
Swing Trading

thechartpatterntrader.com

Alert: 9/25


Get Ready for Mr. Toad's Wild Ride

The presidential debate, OPEC, and Yellen's testimony before Congress could make for volatile markets this week.

Wild Week Ahead: Debate, Polls, OPEC, Fed Chair Yellen's Testimony before Congress and Fed speakers too

Janet Yellen Testifies before Congress Sept 27-28 (Tuesday and Wednesday)


Debate, OPEC, Fed, economy ----- all big risks lurking for markets in the week ahead

OPEC will meet at the International Energy Forum in Algeria from Sept. 26-28, where they will discuss a possible output-limiting deal.

Less

!

The Extreme Point Rule

The directional movement indicator is a powerful tool for spotting shifts in market momentum. A buy signal is given when the positive directional indicator ( DI) crosses above the negative directional indicator (-DI), and conversely, when negative directional indicator crosses above the positive directional indicator a sell signal is generated. When the market is trendless the DI lines crisscross back and forth, which can generate false signals.

Solely following the DI and -DI cross signals by themselves can lead to whipsaws and overtrading. Steven Achelis offers a solution to this problem using the 'extreme point rule' in his marvelous book, Technical Analysis From A To Z. Achelis points to the creator of the directional movement system J. Welles Wilder, and his simple trading rule, to help prevent whipsaws and reduce the number of signals that a trader acts upon.


The extreme point rule requires a trader to mark the extreme price point the day in which the DI and -DI cross. According to Achelis, the extreme point is highest of point of a session when DI crosses above -DI and is the lowest point of the session when -DI crosses above DI. Buy or sell signals are triggered when prices move beyond the extreme point.

!

!

!

!

!

!

!

!

!

This information is presented for education purposes only. StockCharts.com is not responsible for any comments, advice, or annotations presented on this page. Please review our Terms of Use for more details.