Hi Lockitt,What you mentioned is a real concern to traders. As...

Hi Lockitt,

What you mentioned is a real concern to traders.

As you know, we are operating on a WEEKLY time frame for the weekly chart of CTO that I showed in my previous post, and there are 5 trading days to a week where transactions, big or small, occur everyday. To safeguard against concerns similar to what you raised, traders resort to multi-time frame concurrence.

For example, for the case of CTO, to avoid the concerns that you raised, some investors might only start to purchase in heavier volumes ONLY when their immediate term money flow indicator is trending up ( which may be on an intraday chart such as a 3 min, 5 min, half hour or hourly chart) in synergy with the longer term chart(which may be the daily chart). Some may even proceed to trade only when the immediate term, daily chart and their weekly chart goes into concurrence!

By using this principle of concurrence of the shorter time frame indicator with the longer time frame indicator, chances of avoiding whipsaws and getting into real trades are enhanced.

My weekly chart tries to avoid concerns similar to those raised by you by suggesting the confirmed buy signal only when the trendline going through the price bars turns blue ( or uptrend ) and that occurs after the blue dot(buy alert) for entries. Until the trendline turns upwards(blue), the cautious trader will likely take the buy alert as nothing more than just an alert to get ready, and aggressive buying only occurs with the sighting of the blue trendline after or together with the buy alert.

Similarly, you can try to use other technical indicators with different time frames to assist in the decision process of trading and avoid whipsaws or misinterpretation of smart money inflows.

Cheers!

dascore