credibility, page-82

tallmantim...

I simply observe the trading activity at each node...as I said, the behavior in the no-mans-land in between is of less importance.

Depending on the trading behavior at these nodes, specifically the on-screen antics and interpreted net share movements and patterns va the intra-day interp, then I form a view on likely direction.

The chart simply throws up the mathematically important levels...as a product of time and price...at which point things may turn.

They may not.

This is no different to the typical reactions to fibs...they offer a sort of line in the sand, which may or may not be crossed. We do not buy at the fib lines (unless we are particularly agressive), rather we typically observe trading activity at the fibs...THEN decide whether we should enter or not.

Fibs can hold, at which point we might choose to enter...or they can fail, at which point we pretty much ignore the stock until they fall down to the next fib level.

My nodes are no different.

As I suggested earlier...my chart did not predict (from 8 months ago), that we would be at 13.5c last week...and that it would provide a potential pivot point. What the charts did in fact predict however was that IF the stock were at these levels...at this time...then 13.5c would likely be an important mathematical number.

Had the price been higher at this point, a different set of reference nodes would have applied.

The timing of the trading through various price ranges and/or trend lines is also important.

The recent break up from the 22.5c line for example suggested a likely run to the 25c line...over about a week or so...but it came...and went...all in one day!

For me, a premature run such as this, to a price that should not happen for a period...according to the nodes...is a warning of the stock being way over heated.

Had the run to 25c taken a full week however, then any trading over that would have likely been a buy signal for a run to the next node up the relevant trend line.

The fact she retraced the next day...then rapidly fell through the 22.5c node, was an immediate flag to wait for the next node before considering an entry should one be short-term trading it!

As I suggested however, one would not simply enter at the 18c node until the patterns at this level were observed. In this case however, we did in fact see a break upwards from this node ( abuy signla), but once again the rapid failure back to this level was a warning...it turned out to be a false buy signal! When the stock finally fell back below the 18c line, it became a "wait flag" to consider an entry down at 13.5c.

So...I guess the short answer to your question is the nodes simply flag important levels, at which point I observe the trading patterns a little more carefully...whilst the area in between lets me go fishing!

Cheers!