The author's Dip Trip , Elder's Triple Screen and Raschke's 3-10 Divergence all capture elements of these complex interactions. But don't stop at just two or three averages. Trending stocks emit fractals of price movement unique for each issue. Measure one of these fingerprints by the depth a stock corrects after each impulse of a trend. Instead than using complex math to locate these important pivots, traders can construct a Moving Average Rainbow .
Rainbows reveal important and subtle relationships between price, time and trend.
One of the most exciting discoveries uncovers how certain moving averages develop support and resistance behavior with other ones. This trait alone provides the trader with a powerful advantage over the competition. Moving Average Rainbows automatically locate hidden support and resistance unique to the trading vehicle and underlying trend. During this bull move in VTSS, the MARs provided continuous feedback on the cycles of momentum carrying the stock upward. Article contributed by The HARD Right Edge , which presents highly original tutorials, strategies and resources on multi-trend technical analysis and and short term trading.