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Prosticks Articles
Hong Kong Economic Journal --- 23 Oct, 2000
British Pound
Today, we will take a look at the British Pound using
Prosticks charting.
Figure 1 shows the Prosticks chart of the British
Pound. Notice that bar A has a very long range and
thus severe buying pressure had existed at the Modal
Point. Its Modal Point is important. Notice also that the
Modal Point of A has the same price as the Modal
Point of B forming a Modal Platform. Next, consider
the circled bars. For three days in a row, price attempts
to challenge the Modal Platform. However, the Active Range
ends up staying above the platform. Thus, it seems that
the Modal Platform will act as a support for prices. If
traders want to long the currency, they should put the
stoploss below the Modal Platform. That is, when the
Active Range or Modal Point stays below the platform, all
long positions should be liquidated.
Alternatively, one may use a trendline approach to
determine the entry point of longing the currency. Figure
2 shows the Modal line chart of the pound. As can be seen,
we can use draw a resistance trendline L1 using the
Modal Point of C and D. Traders could then
long the currency only if the Modal Point breaks above the
trendline. Refer to Figure 1 again, L2 is the
traditional resistance trendline using the high points of C
and D. As can be seen, the entry point of L1
is earlier than that of L2.
Notice the difference between Figure 1 and Figure 2. In
Figure 1, price has tested the Modal Platform many times.
The general price level resides near the Modal Platform.
However, in Figure 2, we can observe that actually most
Modal Points are well above the Modal Platform. The Modal
line chart offers different perspective. It eliminates
much noise and whipsaws from the charts.
Figure 1
Figure 2
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