Using Price Projection
I have been using price projection for many years, and thereby have learned some peculiarities of its behavior that Arms10 has not described. Two of these are summarized in the examples that follow.
The first situation is where the flat area is far from flat, having quite a bit of price variation across it, and where the trend clearly starts well before the flat area ends. The challenge in these circumstances is how to identify the width of the flat, and where to identify the beginning of the trend. I've chosen an example that is rather extreme in these concerns in order to clearly demonstrate how to handle it. This is shown in Figure 7.3, the daily bars chart of IBM from June 1993 through early February 1994.
The first ...