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Dear Mark D,
Support and resistance levels are very dynamic and, to newbies like me, oftentimes, they are not easily recognizable.
How would I use SMAs to help me identify S&R levels? With what settings?
Thank you!
Doctor T
0
Answers
Thank you for your reply!
I did not mean to use SMA to identify S&R levels. I meant to ask if there was a way to use SMAs to actually draw straight S&R lines.
I'll look into Price Channels.
Doctor T
I use Gerald Appel's Magic numbers. These are levels that he observed to be where expected support or resistance is shown on most charts. Kind of Darvas box like. I combine these horizontal lines with the ZigZag indicator overlay to get a pretty nice visual of Wyckoffian type action.
I use a zigzag 6 and a zigzag 14. These sort of line up with point and figure box and column reversals. I'm really more of a PnF analyst, using dynamic CSS patterns. Line charts come in handy for secondary review and looking at indicators that you can't currently display on StockCharts point and figure charts. The 6 more closely approximates the P&F activity for prices over $50 and the 14 for stocks under $50.
The magic numbers are approximately 15 to 20% apart. I've included them below (for copy/paste), but you can put your lines at whatever spacing works for you. His only go up to 154 as there weren't very many popular stocks in the 70's and 80's higher than that.
4.75,6.25,8,10,12.25,14,16,20.25,24.5,28.75,33,38.5,44,49.5,55,65,77,88,99,110,130,154.
Gerald Appel authored several popular books and methods using technical indicators. In the 1970's, Gerald Appel began to develop and utilize statistical trading systems to spot trends to guide his trades of equity and income mutual funds, stocks, and derivatives. He was a pioneer in the field of technical trading, and he is still considered by some to be a market legend. He invented an indicator used today in most stock charting software called the MACD (Moving Average Convergence/Divergence) Indicator.
Thank you for your reply!
How do you calculate the Gerald Appel's Magic numbers?
Doctor T
For best….