Timing Solutions for Swing Traders: A Novel Approach to Successful Trading Using Technical Analysis and Financial Astrology

CHAPTER 3

Essential Patterns

The price of a stock that has been concluded during a trading period between a buyer and a seller represents the agreed value of such stock for that time frame only. It is an equilibrium point at that moment in time. The value will, therefore, be greatly influenced by existing supply and demand for the stock during that trading period. The existing supply of stocks is the quantity that sellers intend to dispose of; the existing demand for stocks is the quantity that buyers intend to buy. It does not depend on the number of sellers or number of buyers. Thus, when the demand is greater than the supply, price will rise and when the demand is lesser than the supply, price will fall. Agreed value may fluctuate in a narrow range where substantial volume during the day is being transacted. This range will then become the accepted value area or the equilibrium zone. When price moves out of the zone, volatility in price will develop, and if the breakout from the equilibrium zone is accompanied by higher volume, the price volatility on breakout will normally be greater. A solid trend may evolve from such breakouts.

Stock prices fluctuate to make the highs and lows of the day. The daily range is the distance between the high and the low. The weekly range is the range between the weekly (trading days from Monday to Friday) high and low. Range is an important factor in reading price direction. If the price moves upward from a low with expanding ranges, this means ...