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RC Cola & A Channel
I only use the RC and MTF Stochastics / Fibs when I am range trading. Otherwise I hold positions for many days. We have been ranging for about 3 weeks on the GJ so I thought I would try and give you folks something you had not discussed. Coming from a institutional trading environment we usually use channels and fibs. If you add channels to the RC formations you are using you pick up a neat target warning area.
Some points on channels: Use Linear Regression. Keep the channel below 250-300 pips wide. As long as price action stays inside the channel do not update. Trend directions is determined by the channel direction. If channel is up - trend is up. When price action PA breaks the channel at the end of the day do one of 2 things: If price broke the channel in the direction of the trend. pull the channel forward (i.e. update). If PA breaks the channel in the opposite direction of the trend then pull the channel forward AND pull the back of the channel forward to current day minus 1. Most of the time your channel will be 2-4 days long. When you have TIGHT ranging markets for many days the channel will not be updated and price will keep inside the channel boundaries. I only update the channel at the end of each day (period separator). The biggest moves (the start of a trend) will occur when PA goes to the channel wall and hesitates there for several bars, then explodes and continues on out of the channel. These are usually the start of the 500-2000 pip moves. Practice and Have Fun !
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