THE HAndbook oF TEcHnIcAl AnAlySISindicating oversold conditions. Notice that at Points 2 and 3 the trendline failed
to support price. Notice that at both these points, the stochastic did not indicate a
clear oversold condition, as seen at Points X and Y.
Volume on non‐Constant time Charts As seen in Chapter 3, some examples
of non‐constant time‐based charts include:
■ (^) Point and Figure charts
■ (^) Renko charts
■ (^) Three Line Break charts
The time axis is not plotted in a linear fashion for non‐constant time‐based
charts. This affects the angle of geometrically based overlay indicators like trend-
lines, channels, and chart patterns. Equivolume charts are unique. Although each
bar is based on a constant time interval, the width of the bars varies with respect
to volume. This results in the time axis being plotted in a non‐linear fashion, just
as in the case for non‐constant time‐based charts. In Figure 6.38, we observe a
discrepancy in the violation of the trendlines between both types of charting.
fIgure 6.38 Discrepancy in Trendline Penetrations on the Daily Chart of Apple Inc.
Courtesy of Stockcharts.com