Fly Paper

The major feature of this chart is the multi-line channel running through the middle (1). I called this channel the Fly Paper channel, because symbols generally get stuck in this channel, when they are trying to move from a bullish to a bearish trend, or from a bearish to a bullish trend. If the visualization of getting stuck in Fly Paper does not work for you, then think of this channel as a huge mountain range or deep valley in which the market participants are going to have to cross before a new trend can take place. In most cases, they don't make it unless a major fundamental change in the condition of the symbol has occurred.

When prices fall below the channel (1), we are seeing a fundamental shift in how the market sees this symbol from positive to negative. Market participants will no longer want to buy the pullback's, but now sell the rallies.

In this example, it took 3 tries before we were able to get back on the top of the channel (2).

Once this happened, things changes for this symbol, and the market starts once again to buy the dips, and the Channel now starts acting as support.


This chart also tracks, just how far a symbol is likely to move in one day, or one week using an indicator called Average True Range. And in this example, this symbol will move an average range of $8.85 (3) or 2.89% (4) from high to low per day.  

The higher the ATR% is, the more volatile the symbol. Typically, the S&P 500 traders with an ATR% around 1%. 

Back to the Is It Safe Chart