Porosity and Suspension Illustrated

Let's remind ourselves graphically of what porosity is. Figure 13.1 is a 5m chart of the Xetra DAX March 2010 futures. A standard MIDAS support curve is launched from the long black candlestick that creates the lowest point in the sharp one-hour downtrend before price reverses and continues moving up into the next day. However, notice that at the two higher lows, circled price penetrates the MIDAS support curve by several points before responding to it. It does this twice in the first highlighted low and then again in the second one. This is the phenomenon of price porosity. It occurs on all chart timeframes and on all degrees of trend, and it will be present regardless of the format used to chart price.

Get MIDAS Technical Analysis: A VWAP Approach to Trading and Investing in Today's Markets now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.