Charting  |  NOV 2002

Affine Geometry Of The Markets by Viktor Likhovidov

Affine Geometry Of The Markets by Viktor Likhovidov Think the market doesn’t have a memory? Think again. bout five years ago, I came across an interesting article concerning the channeling behavior of market charts. I don’t remember much about the article anymore, except for a method using “magic” parallel lines that seemed promising. I decided to try to derive useful trading signals from the idea with some simple geometric transformations. PRICE CHANNELS AND MARKET MEMORY In a nutshell, the premise is based on the following recommendation: When you find a good channel on a price chart, don’t forget about it, because the market remembers such channels for a long time. At some point in the future, your chart will likely return to that same channel. But how can you “save” these channels effectively? One simple way is to plot parallel lines, setting the distance between them equal to the width of the channel.

by Viktor Likhovidov