In my charting universe the most valuable charts are at the same time often the most simplest. Just give me a channel or a trendline and I’m happy. And I’m not alone – as Jeffrey Kennedy over at EWI puts it: How a Kid With a Ruler Can Make a Million.
Well, that’s exactly what I do on a daily basis (the drawing of lines part – not the making of millions) – I look at a symbol and the first thing I do is to connect the dots, and only then I might add a fib here and there. I’m pretty lukewarm on indicators – I use only a small selection of them – for me price is king.
You should try it – just make sure you have at least three touch points, otherwise your mind is probably dong some good ole’ fashion line fitting.
Today just so happens to offer a great example – pick any average you like but the OEX seems to sport the cleanest pattern. Is it a coincidence that we ran into a wall at this morning’s drop? Obviously not – this is one major support line we got here and the bears won’t get anywhere until they muster the energy to push the tape below it, after which it’ll serve us as resistance.