Hi ooshaaku:
Thanks for the clarification. It was very difficult to find algorithms
and other computational material for trendlines, support lines and
resistance lines, because they have been traditionally treated in a
much more "subjective" manner than other strictly data-based stock
indicators. The following page talks about this:
Trendlines, Moving Average Signals
URL: http://www.stockcharts.com/commentary/mailbag/mailbag20010103.html
Quote: "As with much in technical analysis, drawing trendlines
involves a good bit of art mixed in with some science."
There is no one accepted method for choosing the key factors used in
computing these three indicators, so everyone's lines end up looking
different. However, there are some academic and commercial
papers/pages out there that speak to the issue of how best to
automatically compute these indicators. I have listed them below, with
a brief summary of what *I* got out of them.
Trendlines
**********
* Do Price Trends Exist in Speculative Markets? A Case Study
URL: http://www.departments.bucknell.edu/management/apfa/Hamburg%20Papers/Sodahl%20Paper.pdf
Description: Although the data appendices are missing (and I couldn't
locate them), the theory and formulas in this paper are very
interesting (if complex). A good read.
* Enhancing The Raff Regression Channel
URL: http://www.working-money.com/Documentation/FEEDbk_docs/Archive/1198/Abstracts_new/McKinnon/McKin9811.html
Description: An excerpt from a larger paper that shows use of the
William's %R indicator to help set trendlines.
* Computing Curved Trendlines by Arthur Merrill
URL: http://store.traders.com/-v06-c08-comput-pdf.html
Description: Takes a different approach to trendlines, by fitting them
with curves. Full paper (with formulas) costs $3.95.
*Metastock Formulas: These formulas use a "programming interface"
called Metastock, which can be found at:
http://www.equis.com/
However, even if you do not want to use this language, you may be able
to glean some ideas out of the following algorithms:
URL: http://www.guppytraders.com/Metastock%20Formulas/metastock%20formula%202.htm
Description: There is an interesting formula here called "Metastock
Automatic Trendline Formula" - near the middle of the page. Do a
search for "trendline" to get there quickly.
URL: http://www.guppytraders.com/Metastock%20Formulas/metastock%20formula%2013.htm
Another formula here called "Instantaneous Trendline & Sinewave
Indicator as described by John Ehlers" deserves some consideration.
Near top of page.
URL: http://www.bertigianluca.it/finanza/metastock_formulas/metastock_formulas_index.htm
Several formulas here as well, including 4 up trendline formulas and 4
down trendline formulas.
Support and Resistance Lines
****************************
* Pivot Lines:
URL: http://www.crontech.com/swp/formula_library.html#PivotLines
Details: Some simple formulas for 1st and 2nd resistance and support
lines.
* Stuff on Pivot/Support/Resistance
URL: http://www.mtrader.com/ta/Stuff_onPivot.htm
Description: A very nice page overall.
* Support for Resistance: Technical Analysis and Intraday Exchange
Rates
URL: http://www.ny.frb.org/rmaghome/econ_pol/600osle.pdf
Description: Excellent paper with simple formulas.
* Metastock Formulas: These formulas use a "programming interface"
called Metastock, which can be found at:
http://www.equis.com/
However, even if you do not want to use this language, you may be able
to glean some ideas out of the following algorithms:
URL: http://www.bertigianluca.it/finanza/metastock_formulas/metastock_formulas_index.htm
Go to the above page and use the left-hand frame to go to:
Page 4:
Rather involved algorithm here from a respected publication - "1998
May TASC Trader's Tip - Automatic Support and Resistance"
Page 5:
Shorter algorithm called "Fibonacci Trader- Support & Resistance" near
bottom of page
Page 10:
Very brief formulas called "SUPPORT AND RESISTANCE"
Page 15:
Many, many formulas for both resistance and support line on this page!
I'm not sure what (if anything) further you need at this point. Do you
still want a list of software applications that compute these
indicators (without telling you any of their formulas)? Is there
certain area of this topic you'd like me to follow? I'm happy to do
further research for you on this topic once you let me know how you
liked the information I've found and what direction you'd like to go
from here. (Use the Clarification Request feature to contact me.)
Thanks.
websearcher-ga
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