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A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits by Michael C. Thomsett

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Price Increments on Charts

Determining whether trendlines exist in a high-volatility price pattern or a low-volatility price pattern also helps identify whether the trend has stability and is likely to continue into the future. However, recognizing the level of volatility varies based on the scale of the chart.

Charts prepared through an online free charting service are scaled automatically. The scaling is based on the time period and the total range of prices, with the goal to fit all trading activity into the rectangle. This means that with a narrow range, scaling will also be narrow, and with a broad range, scaling will be much greater. A consequence of this automatic scaling rule is that comparisons of volatility are difficult. What appears ...

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