arepo
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this statement is false


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January 03, 2014, 04:41:53 PM

Quote from: pdawg
OK Here's my take on a 3 month time frame (got both the bears and bull covered):

(img snip)

Personally the price action around the 900 level will be very telling for me...

since the top of your channel is determined only by the slope of the bottom line, which is solely determined by two points of data (both of which are extremes and which qualify as outliers), i'm not sure how robust this model is. the possible confounding scenarios are as follows:

scenario 1 (bearish, dark grey, less deviant, more likely): the deviance of the outliers caused you to underestimate the slope of the channel, and this consolidation is a decision point where we may either correct downward or break through.

scenario 2 (bullish, light grey, more deviant, less likely): the deviance of the outliers caused you to underestimate the slope of the channel, and this latest price action is a bullish breakout.



http://s16.postimg.org/un1muboz9/channel.png

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regardless, always stress test your models!

interesting -- the price action seems to suggest that scenario 2 was correct after all...

--arepo