Gauging the Strength of a Market Move

Most traders and investors are familiar with the saying "the trend is your friend." But deciding what constitutes a trend often proves challenging because it depends on the trader’s preferred time in the trade. Furthermore, once a trend has been identified, the trader must determine its strength.

In his book The Logical Trader, Mark Fisher describes a number of techniques to help his reader spot trend breakouts and identify their strength. Fisher’s ACD trading system uses intraday data to identify the daily opening range for finding trades. But this intraday ACD technique may not appeal to the long-term trader or investor. Here we look at how the technique can be applied to a longer time horizon.

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