Post 009: TeamWork Channel Drawbacks

There is no Holy Grail of trading!!!

Every indicator, system, and technical analysis tool out there has some weakness or drawback. Even fundamental analysis has its weaknesses. I will never say that the ERRC and TeamWork Channel are perfect and without drawbacks. If I did, even I wouldn't trust me!

The first, most obvious drawback is... ALL THOSE LINES make a very busy chart. To tell you the truth, when I first began working with TeamWork Channels, some of my teammates actually laughed at my charts. Did it hurt? Well,... the fact that I could put these channels to effective use, even if only for paper-trades, made it easy to ignore them.

Also, as mentioned in an earlier post, each line drawn in the chart adds a bit more workload for the CPU, and it's important for real-time charting to keep this to a minimum. As I've pointed-out before, you would normally reduce the total number of lines down until you only had those needed to surround the current price.

Unfortunately, because the ERRC, the Standard Error Channel, and the Standard Deviation Channel tools are designed to draw an upper- and a lower-line, you're always going to have and upper-band and a lower-band of channel lines, and almost always only of the two bands is doing anything useful. I've often wished there was a way to turn-off either the upper- or lower-line of the channels, to do away with the band that is doing nothing.

Drawing all the Std Err/Dev Channels needed for a TW Channel can be tedious. For now, one has to perservere, focusing on one's faith that the end-result will prove valuable. Creating one channel, and copying and pasting it, then changing the Units value is the best way to do this. There are other tips I can provide later.

If you happen to have some indicator in the chart, near where you are trying to drawn a TW Channel, it may tend to cause the channels to not drawn on the price plot but on the indicator. This is especially true of indicators that are placed in price window using the Overlay Without Scale option, like I do with my Serendipity Indicator.

On a chart like the one at the left, the thin solid-line of the ERRC is often hard to see amongst all those other lines.

If you have a reason to make it stand-out, you can click on the ERRC line and choose to thicken the line, as shown in the chart on the right. You will find, though, that this will somewhat reduce the precision of the line's ability to chart the Support and Resistance points. I'm sure you'll see what I mean when you try it.

Finally, there is the the drawback of subjectivity. Before I came up with the ERRC, Raff Regression Channels were drawn in many different ways. In fact, I'd bet if you put 10 MetaStock users in a room, and gave them each the same chart to draw Raff Regression Channels on, no two charts would look alike. In fact, I'd be surprised if even one pair of channels between any of the charts shared the exact same dates for the Start Date and End Date.

The use of the Willaims%R indicator to draw the channel was, for me at least, the first step toward reducing the subjectivity of the Raff Regression Channel. The ERRC is a much more accurate and useful tool. It speeds placement, and increases the accuracy of the placement. The addition of my ERRC Color Coder Expert helped reduce subjectivity also. I've seen some charts on web pages that had Raff Regression Channels that not only were not extended to the right, but were willy-nilly drawn on every little switchback tertiary trend in the chart. To me, drawing these channels that way made no sense at all.

Extending the channel lines to the right helps validate/invalidate the channel, because it will show how effectively the lines 'predict' the Support and Resistance points. The parallel lines of a TeamWork Channel will also help validate the channel placement, and reduce subjectivity, by giving even more points for validity-testing.

We will never fully be able to eliminate subjectivity in drawing these channels, but I believe I have some strong and worthwhile ideas on reducing subjectivity to a minimum.

See you in my next post. -Robert

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Post 008: Are Channels Dynamic?

Many people have the opinion that the channel tools in MetaStock change their direction with each new tick of data that comes in. Well, they are right, IF they have made the mistake of placing the End Date of the channel on the last bar/candle of data in the chart. If the End Date (or End Time in Intraday charts) is the last data point in the chart, as new data comes in the end-point shifts up or down based on the new data, and that makes the channel's direction shift, making it virtually worthless for trading.

Properly drawn (or placed) ERRCs or TW Channels don't behave this way, as they will never use the last point of data for the End Date.

Once an ERRC or TeamWork Channel is properly placed and extended into the future, it will be ready to chart Support and Resistance levels as they happen; however, they DO NOT change as new data comes in. A channel that changes with new data is of no value at all for a trader, particular not for a real-time trader. So, every effort should be made to place these channels accurately. Be as certain as you possibly can be as to their accuracy before making trading decisions based on them.

Formulaic Versions of the Channel Tools Do the Same Thing
A co-worker of mine at my former employer, who was very skilled in writing formulas for MetaStock was asked to write a formula to reproduce the Raff Regression Channel. Did he succeed? Yes and No! Yes, he managed to create a formula that seemed to duplicate the Raff Regression Channel, but actually, it drew it backward.

His formula, perforce, initially he used the last date of data in the chart and picked the 'start date' for the channel virtually at random. Later, he 'refined' it to allow the entry of a specific Start Date back to which it would be drawn, but he still used the latest incoming data for the End Date/Time, hence it was dynamic and kept changing the direction of the lines as new data came in, making it, in my view, worthless for trading.

In other words, he could produce a very real looking pseudo-Raff Regression Channel, but it differed from the real thing in two critical ways. First, it was dynamic, because, since it used the last data point in the chart as the 'end date', as new data came in, the path of the channel changed; and, 2) any calculated formula in MetaStock cannot extend to the right beyond the last point of data in the chart, thus it has no ability to project the path of the channel into the future.

A formulaic channel like this, being calculated, instead of drawn, makes it possible for MetaStock to determine whether the price is above or below one of the lines of the channel, but the changing nature of the channel's path makes this aspect of little real value.

I've seen other formulaic reproductions of the various channels that are hand-drawn in MetaStock, but they each have the same flaws, so in my view, they are not worth much.

The ERRC and TeamWork Channel must be drawn on historical data, and extended to the right (into the future), thus the Start Date (SD) and End Date (ED), which make up the Hand-Drawn Range (HD Range) are fixed points in the past that cause the channel to follow a specific path into the future. If drawn correctly, this path will cause the channel to accurately chart points of Support and Resistance in the future that the savvy trader can use to aid with trading decisions.



As you review this chart from Post 004, I'll summarize and emphasize: The last point of data in the chart MUST NEVER BE USED for the end date of an ERRC or a TeamWork Channel! If you do this, you're wasting your time, as the unstable nature of the last point of data would very likely negatively impact your trading results.

So what are the drawbacks, if any, of using the ERRC and TeamWork Channel? We'll discuss this in the next post.

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Post 007: Why do TW Channels Work?

Hopefully, by this time, you've seen enough to believe in the effectiveness of TeamWork Channels in charting Support and Resistance levels well into the future. Perhaps the thought has crossed your mind, "why/how are TeamWork Channels able to do this?" Here are my thoughts on this issue.

First, let's review what the various lines in TeamWork Channels are. Each TW Channel contains one ERRC, or Enhanced Raff Regression Channel; which is a Raff Regression Channel placed using the Williams'%R Indicator as a guide (my ERRC Color-Coder Expert helps me do this) and it is extended to the right. The TW Channel's parallel lines are created using Standard Error Channels and/or Standard Deviation Channels that use the same Start Date (SD) and End Date (ED) as the ERRC, but with incremental Units values to place them at different levels.

Let's review these three types of channels.

The makers of MetaStock, Equis International, describe the differences in the three channel tools in MetaStock on their web site's FAQs section:

What are the differences between the three channel tools...?
(There are actually four channel tools available in MetaStock now,
but the new Equi-Distant Channel is of no relevance to our discussions.)

Here's how MSN's Encarta defines: Standard Deviation

Here's how MSN's Encarta defines: Standard Error

Check out this Wikipedia article on: Standard Deviation

Check out this Wikipedia article on: Standard Error

The ERRC places its outer lines at the extreme distance from the Regression Line (RL)that the price moved anywhere in the SD to ED Range of the channel, either above or below the RL.

The Standard Deviation Channel places the outer lines based on the number of Standard Deviations you wish to use. The Standard Deviation is calculated on a Moving Average of the price movement within the SD to ED range, inclusive. It is a measure of how well the prices are adhering to the path of Moving Average.

The Standard Error Channel uses Units of Standard Errors to place the lines. Standard Error is calculated on the Regression Line, and is a measure of how well the prices are adhering to the path of the Regession Line. This is why I tend to have a preference for using Std Err Channels over Std Dev Channels for my TW Channels.

The ERRC and the TW Channel essentially measure the concensus of feeling for the stock during a particular trend, and when extended, they predictively chart levels of Support and Resistance based on the attitudes present during that trend.

TeamWork Channels don't just chart Support and Resistance to vertical price levels, but Support and Resistance to Rate/Speed of Price Change as well, indicated by the relative slope of the trend. Some move up rapidly, some down rapidly, others slope up/down gradually, and, in some cases the prices are moving sideways. You'll often see a TW channel impact the price plot and suddenly the price movement takes on the Rate of Change aspect of the TW Channel.

There is also a Volatility aspect of TW Channels. Some can use whole single-digit changes in the Units value to produce effective results, whereas others may require Units values incremented by half- or even quarter-Units. To put it another way, if you check the Units increment of the Standard Error Lines in a TW Channel, they may increment like this: 1, 2, 3, 4, 5,... 99. Others may run .5, 1, 1.5, 2, 2.5,... 99. Others, .25, .50, .75, 1, 1.25, 1.50, 1.75, 2.0,... 99. Experience in drawing TW Channels will give you skill at guessing which increment should be used.

I hope I've managed to express my opinion on why these channels work. I suppose the important thing is...they do!

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Post 006: The Fenceline & Overall TW Channels' Utility

THE FENCELINE CHANNEL
In Post #004, I mentioned that I almost always draw a "Fenceline Channel" just outside an ERRC that I've drawn, by setting the Units value so the Std Err Channel line is drawn just a little outside the ERRC's outer lines. Setting the distance it falls outside the ERRC outer line is a bit tricky, but it is critical to provide a worthwhile test of potential breakouts from the channel.

It's a bit hard to describe how I get the Fenceline Channel where I want it. Please review the two charts I'll post below. The one just below is similar to one we saw in Post #004. Note how the Outer Line of the ERRC falls almost half-way between the Fenceline Channel and the nearest Std Err Channel line just inside the ERRC. This makes for a good Fenceline Channel.



My rule of thumb for the distance a Possible Fencline Channel (PFC) must be outside the ERRC's outer line, can be stated like this, "the ERRC's outer line must be no closer to the PFC than 1/3rd the distance between the PFC and the first Std Err Channel line within the ERRC's outer line." If it is too close to the PFC another Std Err Channel will be used just a bit farther out, using a Units value at least .25 Units larger than the Units value used for the PFC.

Specific measurements are not needed,... "eye-balling" the distance is sufficient.

In the last illustration in this post, you'll see an upward-trending green TW Channel that shows a PFC that proved to be much too close to the ERRC's outer line. I set that line to red, though it's hard to see because it sits right next to the ERRC's outer line. I drew another Std Err Channel at another .5 Units distance outside the ERRC, to use as my Fenceline Channel.

My comments and illustrations thus far were aimed at giving you some hints on how I use the Fenceline Channel to test whether the price has exited sufficiently to be deemed a 'validated break-out' from the ERRC, ending the current trend. Basically, in a Daily chart, if the price Closes outside the Fenceline Channel, I deem it a "likely/tentative breakout", and I make a note to watch it the next day. If it then Closes back inside the ERRC's outer line, I assume the trend continues and the current ERRC is still in force. If on the next day the price continues is apparent breakout through the Fenceline Channel, I then assume the breakout from the ERRC is "real", meaning the trend has ended...and I use this to guide my trading decisions.  Remember, it must Close outside the FenceLine Channel to be deemed even a "likely/tentative breakout".

THE OVERALL TW CHANNEL
In Post #005, I mentioned that I often draw an "Overall TW Channel" and promised you an illustration of how useful it can be. Below are two illustrations, both using a Daily chart of Microsoft (MSFT). The first shows a full view of all the data so you can see the placement of the Overall TW Channel. The second shows a close view near the end of the chart. You can see in both charts how the Overall TW Channel lines provide Support and Resistance at key places. The second chart makes this more readily visible.


Overall TW Channel SD: 07/01/1986 & ED: 09/26/2000



I think you can see that the Overall TW Channel can indeed provide strong clues as to how the price will behave. It can often explain why the price stalls (finds Resistance/Support) at certain levels where, on a normal chart, there is no clue as to why it is doing so. It is my belief that when such mysterious price behavior occurs, placing additional accurately placed Teamwork Channels in the chart will reveal the Resistance/Support that is causing the seemingly anomalous price behavior.

Remember, please, that in these illustrative charts, I will draw more Std Err/Dev Channels than I would normally use in my charts. For instance, in the first of the two charts just above, I've drawn them top to bottom of the Overall TW Channel. Initially, when analysing the validity of the Overall TW Channel, this many lines would be useful, but once assured it was placed properly, I would normally remove all but a few of them. All I really need is enough of them to surround the current price, to give me clues as to what the price might do.


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========= See you in my next post....-Robert ========

Post 005: TeamWork Channels On the Nasdaq 100 Index

Perhaps the most important aspect of ERRCs and TeamWork Channels is that they can be plotted on an existing trend in the chart, and as they are always extended to the right, this allows them to chart Support and Resistance levels in the future. Isn't that what all traders wish for? Some way to help them tell what is going to happen in the future?

Take for instance the Nasdaq 100 Index, as shown in my charts below. First I show you the ERRCs I drew on the chart, giving the SD and ED information, so you can duplicate this chart. You'll note that I've loaded all of the available data, back to early 1994. Why bother with data that far back? How can it help my trading today? Well, that's what ERRCs and TW Channels do best, predict the future Support & Resistance levels near the end of the chart, giving very good clues as to what might happen next.

After drawing the first ERRC, labeled "A" in the chart, I added the first set of Standard Error Channels, the "internal set", plus the first one just outside the outer-lines of the ERRC, aka "the Fenceline Channel". I looked closely at how well these lines were charting the internal Support & Resistance Levels, using my initial SD & ED points.

The internal Std Err Channel lines can confirm or disprove the accuracy of that initial placement. If I see a hint that perhaps my ERRC is not as accurately placed as it might have been, I make adjustments to the SD and ED of each until I'm certain I've picked the best possible SD and ED points. The point is not to get the ERRC right the first time (although I often can with the help of my ERRC Color Coder Expert), but to get it right, period. So don't be afraid to make adjustments, if it looks warranted.



After I've got a good set of TeamWork Channels in place, I start to add more Std Err/Dev Channels as needed to draw Support & Resistance Levels whereever I think they would be useful on the chart. For these illustrations, I've added more than I normally would, just so you can see how well they chart the S&R Levels. Normally, I'd add in only sufficent Std Err/Dev Channels to surround the price movement at the end of the chart. It is these lines that will prove most useful in making trading decisions.

My next image is a view near the end of the chart where the TW Channels are converging on the recent prices. I wanted to show the strong uptrend that began in mid-July, so this is not zoomed-in well enough to show great detail, but I thought it worth posting.



And, finally, the following zoomed-in shot of the right-most end of the chart, provides you with a good look at how well the TW Channels are plotting the Support and Resistance levels. The lines all extend off the right end of the chart, so as new data comes in, the charted S&R Levels will be there to help you judge what the prices might do.



Practice and Experience are the best teachers for anything, and they certainly are essential to using these channel tools effectively. So, here's my next Channel Challenge: 1) duplicate this Nasdag 100 chart, and then, 2) pick another Index of your choice to try your hand at plotting the TW Channels yourself. Again, feel free to e-mail me with your results.

Earlier, I mentioned that I usually draw the fewest number of TW Channel lines needed to give me a good set of S&R Level lines at the end of the chart. There are good reasons for this. First, the more lines in the chart, the more cluttered/busy it will appear, but more importantly, each line represents a little more work for the computer to do. If you use these channels in an Intraday chart, the more there are in the chart, the greater the potential for the program to struggle to keep up with the data flow. I often like to have two or three charts of the same security open, so I try to minimize the workload each chart presents.

OK, let's review a bit. I use my Expert to help me draw each ERRC, placing it as accurately as I can. I then add the 'internal' set of Std Err/Dev Channels, and the Fenceline Channel, so they can help confirm or disprove the validity of my initial ERRC placement. If needed, I adjust the SD & ED for this set of channels to get the most accurate TW Channel possible. You'll note that I tend to draw the first ERRC at the left-most end of the chart, on the most useful trend I can visually see there. I then work to the right, creating ERRCs until I've all I feel I need. When I have a need to, I label the ERRCs each using letters, A, B, C, ..., F, and so on as needed.

I always record the finalized SD & ED points for each TW Channel, but not usually in the chart itself. I keep these noted either in Excel or Notepad, so that I can get them back if my chart happens to be lost. A lesson well learned when it happened to me once and I had to redo all of my work.

There is one more member of the TeamWork Channels team,...the OverAll TW Channel. This starts with an ERRC drawn with the SD on the first data point at the left of the chart. The ED will sometimes be the last date in the chart, but more often it is a point prior to the highest peak in the chart. The ED is set so the channel most accurately fits the entire chart's price data. This ERRC's upper-line will always touch the highest peak in the chart. The lower-line will usually touch the lowest-point in the chart. When I label this ERRC, I usually use the letter O, as an abbreviation of "Overall". Once placed, I then draw only its 'internal set' of Std Err/Dev Channels to make it into a TeamWork Channel. I'll provide an illustration later, and you'll be surprised what help an Overall TW Channel can be on a chart.

OK, that's enough for now. Goodnight...hope you enjoy the Super Bowl tomorrow. My pick? I'd prefer the Colts, because they were the Baltimore Colts when I was stationed in Maryland, many years ago. Also, I believe their Quarterback, Peyton Manning, is smarter than the Bears' Quaterback. If the Colts Defensive Team can be as strong as its Offensive Team, I think they can bring in a strong win.

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Post 004: How to Draw ERRCs and TeamWork Channels

In my 1993 article, Enhancing the Raff Regression Channel, I described how I developed the ERRC. Basically, as I worked in my charts, practicing the use of the Raff Regression Channel, I happened to have the Williams%R indicator in my chart. I came to see that whenever I drew what appeared to be a very accurate channel, there appeared to be a relationship between the Start Date (SD) and End Date (ED) and the Over-Sold and Over-Bought extremes of the indicator. So I began to use it to improve my channel accuracy.

Eventually, I even created an Expert Advisor in MetaStock, to help with ERRC placement. It highlights the candles (I always use Candlesticks) in my chart different colors based on the relative OS/OB extremes. This helped me more rapidly and conveniently find the most effective dates to use for my SD and ED positions.

At the end of my article, I offered a free copy of my Expert Advisor, which I call the McKinnon ERRC Color-Coder, to the readers. I am no longer offering this Expert for free, <>

Here's an illustration of the <> Expert on the chart of the Nasdaq 100 Index. The colors on the candles help identify the likely dates on which to place the SD and ED end-points of the channel. Once a likely spot is selected, drop the channel there. This portion of the channel, from SD to ED, is the Hand-Drawn Range of the ERRC. Now, extend the channel lines to the right, to provide the Predictive Range of the ERRC. Adjustments to the SD & ED should be made, if needed, to find the most accurate ERRC that does the best job of enclosing the trend and predictively charting the Support & Resistance levels.


Below, we zoom-out a bit to show how this ERRC did at predicting the price movement, and to show the eventual break-out from the ERRC, indicating the trend has ended.



OK, we've got our accurate ERRC, now we add the Standard Error/Deviation Channels, to turn this into a TeamWork Channel. I use a Long-Dash line style for Standard Error Channels (Std Err Channels), and the Long-Dash-Short-Dash line style for the Standard Deviation Channels (Std Dev Channels). The ERRC is always a Solid-Line style.  <>

Std Dev Channels can often fall on top of, or very near some of the Std Err Channels. Only draw those lines that do something useful in the chart. All these lines can make for a very busy chart, so use as few as you can to meet your need.



Note the one Std Err Channel I've placed just outside the ERRC's outer lines. I will almost always draw a line at this position to act as a Fenceline Channel. It helps me determine whether an attempted break-out from the ERRC is 'tentative' or 'actual'.

Once you've placed enough stacked channel lines to meet your needs, detach the McKinnon ERRC Color Coder Expert Advisor from the chart. The candles will revert to black (assuming that is your 'base' color), making them more visible amid the channel lines.

Summation: I hope these instructions and illustrations are sufficient to give you some level of confidence, so you can begin trying out the ERRC and TeamWork Channels. The McKinnon ERRC Color Coder Expert Advisor could be very helpful to you, if you're serious about learning these methods. If this multiple channel drawing process seems tedious, please don't let you dissuade from trying it, as I believe the ERRC and TW Channels can be very valuable to you.  Hopefully, in the future MetaStock will have tools to make it easier.

Wouldn't it be nice if Equis <> could add TW Channels in MetaStock, with a new and much simpler method of drawing these channels?


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Post 003: The JBSS Daily Chart Continued

The JBSS chart continues from the break-out point we saw at the lower-right of the previous chart. An interesting gap appeared in late October, which plunged when it broke one support level and dropped quickly to another level of support. Note how the TW Channel lines seem to 'catch' the dropping prices.



Continuing the price plot in the chart below, we see a couple more gaps, a small one in late August, and a large one in late October (again). The channel lines continue to plot the Support and Resistance points. The channel lines just above the ERRC's upper-line 'catch' the dropping prices. A classic dead-cat bounce occurs, then downward movement continues for a time. Then, from early February thru mid-April, an uptrend occurs. It ends when the Support of the blue upward TW Channel's line is broken.



And, finally, the chart below brings us up to date as of 01/31/07. It's entertaining to see the prices take a swan-dive (Apr - May) out of the uptrend at the left, and lands on the upper-line of the ERRC in the gradually uptrending TW Channel. After a short battle at this Support level, the Bears win-out and the prices stair-step down the downward-sloping TW Channel lines.

The drop stops at the the Support charted by the bottom-line of the gradually up-sloping ERRC. The Support charted by this line is tested twice more before an uptrend take the prices back up above the middle-line of the ERRC.

It looks like the top of the ERRC will be reached again, but will it stop there? Since the upper-line of the ERRC charts a Resistance level, there will no doubt be a struggle to break up through it. Perhaps the price may eventually reach the 16.5 to 17.0 level again. By late spring, maybe?



OK, my final chart below is the kicker. In the preceding charts of JBSS, you saw the TeamWork Channels at work. TeamWork Channels consist of a single ERRC, plus at least one, but usually many Standard Error Channels or Standard Deviation Channels applied on top of the ERRC, using the same Start Date and End Date that the ERRC uses.

In placing the Standard Error/Deviation Channels (SE/DCs) the Units value of the channel is set to determine the distance from the center line (LRL) that the outer lines will be drawn. These are usually set to whole-unit increments (1, 2, 3,...99), but it is often helpful to set them to half- or even quarter-unit increments (.5, 1.0, 1.5, 2.0, 2.5...99/.25, .50, .75, 1.0, 1.25,...99). Which increment you use is dependant mostly on how volatile the prices are, but you should start with whole-unit increments, and add in smaller ones if needed.

The chart below shows the Start Date (SD) and End Date (ED) used by the five ERRCs I placed in my JBSS chart. Surprised there were only 5? Really, there were only 5. And these were drawn on trends well back in time.

Check out the SD and ED information on this chart. With this information, you could open a chart of JBSS in MetaStock and build the exact same chart I used for these illustrations. In fact, that leads me to my first Channel Challenge for Technical Analysts.

I challenge you to do two things: first, duplicate the TW Channels I've placed in JBSS's chart, and then draw an accurate ERRC on the downtrend on the right, on which I didn't place an ERRC...the downtrend that began just after the prices broke out of and away from the steep downward ERRC labeled "E".  You can simply provide me with your SD and ED dates (in a Comment) if you want me to check it, or you can email it to me.



The first challenge with give you practice with drawing the TW Channels, but on dates I've already determined work very well. The second will give you practice at drawing an ERRC on a downtrend that offers its own challenge...do you include the huge gap in the Hand-Drawn Range (HDR) of the ERRC? Or, do you draw it from the peak just after it, near the end of 2004?

If you take up these two challenges, I'd love to hear from you.  Be sure to include the SD and ED for the downtrending ERRC you drew for the second part of the challenge. If, while you are working on all of this, you discover any other channel(s) that seem(s) to work as well as mine, feel free to provide its/their SD and ED information as well. I'll recreate your chart, and give you my opinion.

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Post 002: First Sample Chart TW Channels on JBSS

This Daily chart of Sanfilippo (JBSS) was one that turned-up in an Exploration report. The Exploration was one I wrote in 1993 to help me find trading opportunities using the ERRC, so I thought it might be an appropriate one to begin my reader's education. I've placed a number of TeamWork Channels in it. I'll show you the details of the ERRC that each TW Channel used later on.



This is a chart that ends on 3/11/2004. The above view permits a more overall view of some of the major trends and how the TW Channels track them, showing Support and Resistance at critical points. A closer look below shows a better view of this Support and Resistance.



I will post more images of this same chart, showing what happened after 3/11/2004, the last date in the chart above. You'll be surprised to see that these TW Channels, which were drawn on trends way back in the past, continue to effectively chart Support and Resistance points in the prices well into the future.

The chart below ends at 06/24/2004. I've changed the color of the main downtrending TW Channel, but you can see that then end of the chart above is on the left side of this chart. Note how the prices try to break out of the slight uptrend, fail, and gap down. Note all the points where the lines are charting Support and Resistance. The prices have broken decisively out of the downtrend near the bottom-right of the chart.



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