| AUG 1994
Studying Price Behavior by Michael Daley
Price behavior? Can you really read it? This article points out ways to look at price behavior to give you insight into possible consistencies, such as how much today's range typically overlaps yesterday's range. Not only that, how often does today's range not include yesterday's closing price? Being armed with such knowledge could help you to make trading decisions by knowing the characteristics of your favorite markets. It is a well-known fact that markets spend more time in sideways consolidations than they do trending strongly in a given direction. Regardless of what phase they are in, however, the day's trading ranges, as represented by price bars on a chart, normally overlap one another to a greater or lesser degree. This partial– or sometimes complete – overlapping of one day's trading range by the next interested me because it is one aspect of price action that repeats, to some extent, more than 90% of the time in some markets. Anything that happens with such regularity in a futures market, I decided, might be worth investigating. To investigate quickly and painlessly, I used a formula that can be programmed on EQUIS' MetaStock (for all of the formulas used in this article, please see sidebar, ""MetaStock formulas"") or a spreadsheet. In addition, I have included several extra formulas that can be used to measure other aspects of price behavior. It is not my intent here to offer a specific trading methodology. The various formulas are presented, along with a few opinions, for readers to use or expand upon as they see fit.
by Michael Daley
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.