Chart Your Way to Profits: The Online Trader's Guide to Technical Analysis with ProphetCharts, Second Edition

Chapter 12. Multiple Tops and Bottoms

This chapter discusses two new, related subjects: how to emphasize particular parts of a chart with highlighting and text, and how to recognize and profit from multiple tops and bottoms. When a chart is in the process of creating a multiple top or bottom, it is helpful to be able to highlight these zones as it is happening.

HIGHLIGHTING CHARTS

It is almost certain you have used a wide variety of highlighter pens. These pens allow you to draw a see-through stripe (usually in yellow) on top of text in order to call it out as important. For instance, when reading a textbook, you may highlight certain portions so that when you reread it, you can focus on just the most important parts of the text.

That is precisely the idea behind both highlighter tools in ProphetCharts. Each of them does the same thing: produces a see-through color in either an oval or rectangular shape (depending on the tool selected). You can control how transparent the color is as well as what color is used.

You may be wondering what kinds of things you would want to highlight. The answer is anything that merits attention. It could be a huge gap in a chart, a series of tops or bottoms, an area of consolidation, or an interesting price pattern. Just as with any of the other drawn objects, the principle is to embellish the chart in such a way that it is more meaningful to you both now and in the future.

Figure 12.1. The oval highlighting tool.

Applying a highlight to a chart is very ...