The aim of reading stock charts is to track trading opportunities by identifying price behavior, which is based on recognition of past price patterns and price analysis, to anticipate the probable outcome.
The concept of the trading method described in this book is for end-of-day (EOD) traders, and the method is centered on a trend-following concept. To reduce risks, the method embodies as its main tenet the usage of two time frames to better gauge trade entries and exits. The combination of the four dimensions related to trend, as discussed in earlier chapters, will help traders to identify different market environments and to switch a trading strategy from trending mode to mean reversal mode using the momentum oscillator and Queuing Theory. The method will assist traders to differentiate between a market that is in a corrective phase and one that is in an impulse phase and to anticipate areas of support and resistance levels, so they may plan their trading strategy accordingly.
These are the basic assumptions of the methodology: