Summary Book 2 - Chart Patterns (Chapter 1)

A straight line drawn on a log scale is curved in arithmatic scale.
a straight line on a arithmatic scale is cureved on a log scale.
Many serious investors use the log scale or the semi log scale.
semilog means one acix uses the log scale, the other uses arithmatic.
A minor high is a small price peak where prices decline on either side of the peak for days or weeks.

A minor low is minor high upside down. Prices decline reach bottom low and climb.

A typical pattern is drawn from the highest high on the chart to the point of interest, making sure the line skirts but does not pierce, as many minor high as possible.

An internal trendline connects the price clusters, these are the flat tops of the consolidation regions, not the highest price in the minor highs.

why use an internal trendline? they represent the trading behavior of the masses. most price action takes place at the congestion area, not at the top of the tail.
When the minor high does not lineup draw an internal trendline.

NOTE there is no right or wrong spacing or touch count.


the longer the trendline, the more significant it is.
trendline angles are significant for performance.
volume trend influences the price performance after breakout
linear regression is a way to best fit a line to the volume points, the slope of the line gives you the trend.
market capitalization is the number of shares outstanding multiplied by the breakout price.
best performance comes from small caps then mid caps and finally large caps, not a mix.

Find the highest high and the lowest minor high before the lowest low. draw a down trendline between the two such that is does not intersect prices
the trend chanage method has 3 rules.
1. price must close above the trendline(point 1)
2. prices must stop making lower lows and retest the low (point 2)
3. price should climb above the prior minor high (point 3)

I tried this with

1 UTOPIA BERHAD [S] (0140) on the following url: http://www.bursamalaysia.com/market/listed-companies/list-of-companies/plc-profile.html?stock_code=0140

When Scoring :
a total above zero in a score means the trendline is likey to show good performance(better than the median rise) 56% performance - a buy signal;
score below zero suggests weak performance (below the median rise) 27% performance -avoid signal;
a zero score means it is your call whether you want to take a change and make an investment.