1、Chapter 19 Automatic Regression Trend Channels19 259How to Use and Trade with Auto Trend ChannelsThe Regression Trend Channels are very useful in defining and containing thetrend of the market. When the prices break a well established Trend Channel,the market usually changes Trend. Rather than draw
2、the channels, we decidedthat the process would be made more clear if we automated it. First, lets discussa problem that some traders encounter when using the Regression Channel.In the Regression Trend Channel Menu, the checkmarks in the Standard Deviationboxes need to be checked on. When they are tu
3、rned on, the software calculatesthe standard deviation for the upper and lower channels. If the Standard Deviationis turned off, then the software simply finds the highest and lowest bars anddraws the upper and lower channels using these high/low peaks. To use theRegression Trend Channel as discusse
4、d in this material and in the seminar tapes,you need to turn the Standard Deviation on.C H A P T E RAutomatic RegressionTrend ChannelsFigure 19-1b: Channels withStandard Deviation Turned OffFigure 19-1a: Channels withStandard Deviation Turned On1919 260eSignal, Part 2 Applying Technical AnalysisPivo
5、t Selection for Auto ChannelsWe tried several different methods and settled on the following: The user definesthe last Pivot from which the software draws the Auto Channels. For longer-term Trends, use the Primary or Major setting. For real short-term Trends, usethe Intermediate or Minor settings. W
6、e recommend this study be used by selectingthe Primary or the Major Pivot. Otherwise, the Auto Channels will be constantlyredrawn every time a minor pivot is made. This constant switching will make theAuto Channels useless. The following examples will make the Pivot selectionclear.Primary PivotBy se
7、lecting Primary Pivot as the minimum pivot, the software looks for theprevious Primary pivot and draws the Trend Regression Channels from thisPrimary Pivot. When a new Primary Pivot is labeled, the Channels areautomatically redrawn from the new pivot.Major PivotBy selecting Major Pivot as the minimu
8、m pivot, the software looks for the previousMajor pivot and draws the Trend Regression Channels from this Major Pivot.When a new Major Pivot is labeled, the Channels are automatically redrawnfrom the new pivot.Figure 19-2: Major PivotChapter 19 Automatic Regression Trend Channels19 261Figure 19-3: A
9、CDO using the Auto Regression Trend ChannelsUsing the Auto Regression Trend ChannelsThe SetupThe following trade is Accredo Health Inc. on a Daily chart using the Elliott TypeOne Trade setup with the Auto Regression Trend Channels and Elliott Oscillator.Key Points to Observe: The Oscillator pulled b
10、ack to zero, but not more than 40% beyond zero. The Profit Taking Index (PTI) is greater than 35 at 58. The Wave 4 Channels are holding.These points mean that the odds are good for a rally to Wave 5. Buy ACDO atthe cross of the Auto Trend Channels.19 262eSignal, Part 2 Applying Technical AnalysisNotes
