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Last time in our best online trading series on Will the trend stop or continue we discussed how measuring the strength of a trend requires two types of tools , which will help you assess if the trend will continue or if it will stop . The first tool was the proper setting of targets according to support and resistance’s structure .

The second tool to use is momentum tools. You should use momentum tools to make the right judgements and apply them to a smaller timeframe than the one you’re trading … basically if you are trading a daily chart , trying to pick of the high or low of the day with your trades , then you would be looking at an hourly or half-hour chart to give you support in your trading decisions intraday .

Momentum tools – what are they? A short-term moving average is one of the best ; three moving averages should be used within a channel system and you’ll then have a matrix that you can use to measure a trend’s strength. There are many channel systems but one of the most effective is the Drummond Geometry system (you should have learned this in your best online trading) which uses as its center line a short-term moving average of the average of the low, high, and the close of the last 3 bars that have been completed, projected forward onto the future bar . Then two channel bands are added to this based upon averages that are similarly managed on the previous three pivot points . Judgments that are very effective of the strenght of the market can be made by monitoring where sequential closes occur in relationship to this channel system .

You should also establish market "flow" by taking measurements using different price strength aspects, including how close to the low or high the bar close is , the difference between the open and the close, how large or small the range of the bar is , and how much progress the bar is making through your support and resistance matrix .

Another important tip : Because each time-frame has its own system of support and resistance , watch the difficulty or ease of the lowest timeframe that you monitor breaks its own resistance or support in a trend . The more easily you see this happen , the more the underlying trend is probably going to be robust. Within an uptrend , support close to the low of the bar is going to hold , and resistance nearby is more likely to break easily. Lower time-period support holding, and resistance breaking – this is a sign that is reliable showing the strength of the trend.

With these tips, your stock trading strategy should become a winner consistently as you are able to know the difference between trends that are waning and those that may go on for days, weeks, or months . A good course that sharpens your technical analysis training can save you both money and time by giving you the tools you need to make these important distinctions .