I've adjusted my channel slightly...the slope is steeper, and is better matched so some other features in the AAPL 15min price history. There's no science to choosing channels...its pretty arbitrary, but what I have noticed is that certain choices of slope match existing details better.
When AAPL prints the next local bottom, we'll have an even better idea of what the channel looks like.
In this case, the new slope matches the slope of some tight channeling around the middle line, and also connects the wider transition points above and below. The top and bottom lines are centered some proportion of the standard deviation of all the data in the regression, so it makes sense to me that a well fit channel should capture big peaks above and below the center line nd connect some smaller channels with the same slope of line. You cn imagin sliding the upper and lower lines vertically (up or down) to test fit conditions. Tweaking the slope is effectively done by changing one of the end points to include/remove some data from the regression fit. The choice of endpoints is tough in the beginning of new trend, but gets easier as the path unfolds.
And notice the channel also sets the avg expected gain and price movement. So if you have weigh price movement vs. premium loss, this helps provide some direction in an average sense.
Its all empirical, but there's little arguing boundaries can be set, and that there is a linear trend supporting the price movement for some time until some big event changes the dynmics.
Price movement to the boundaries sets up higher reward/risk opportunities for quick trades on the reversal. Good luck!
No comments:
Post a Comment