Stochastic lines as the basis for bottom judgment... [Bottom chart basics (3) - total 8]
Stochastic lines as a basis for judging market bottoms
As the name suggests, the bottom chart is fundamentally a chart that captures the bottom.
Therefore, what shapes of the stochastic line can serve as the judgment criteria for a bottom (≒ white-arrow signals)
will be explained with several patterns (concrete examples).
Pattern 1 －Only the white line touches or nearly touches the upper (lower) bound.
In this case, only when the white line and the three pink lines diverge significantly from the other mid- to long-term lines.
The white-arrow signal often does not light up.
Also, after the white line touches the upper or lower bound, it often reverses sharply in the opposite direction.
Pattern 2－At the upper (lower) bound, the white line crosses the pink line.
Various points of contact with the pink line, such as the first pink line, the first and second pink lines, or the first to third pink lines.
Pattern 3 －In a strong uptrend or downtrend, at the upper (lower) bound, the three pink lines cluster together and touch (intersect) the green line.
Next time, to be continued in [Foundation of the Bottom Chart ④].
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Where exactly do the signals appear?
→ I tried trading with backtesting.
