THE HAnDbook of TECHnICAl AnAlysIsFigure 27.13 depicts a price cluster comprising a one‐to‐one downside
reward‐to‐risk ratio‐based expansion, Fibonacci 50 percent retracement level, and
a multi‐tested resistance level around the $82 price level, on the Daily 3M Chart.
Figure 27.14 depicts price clustering around prior support levels at the right
shoulder of an inverted head and shoulders formation on the daily 3M Co. chart,
coinciding with the pivot point support levels.
Figure 27.15 depicts the use of a range filter to identify significant inflection
points on the daily Gold chart. The threshold for the one‐period ATR values is
set at a level where only a small percentage of signals is allowed through, thereby
providing the most significant overextended price activity as a guide to predicting
potential reversals in price that frequently accompany these historically extreme
values. It also provides the most significant inflection points upon which to apply
Fibonacci and Gann analysis, draw trendlines and channels, and so on. Notice
fIgure 27.12 Price Clustering on the Daily 3M Chart.
Courtesy of Stockcharts.com
fIgure 27.13 Price Cluster on the Daily 3M Chart.
Courtesy of Stockcharts.com