Brainy's 
3Ways Rule in 3Times

In the share market, any stock or index
will be trading in one of 3 "ways":
  • in an up trend, or
  • in a down trend, or
  • there will be no trend,
and this can apply in 3 time frames.
See the Members' Area of the
Share Market Toolbox for much more detail.

Why is this important? Well if we can spot a rising trend, and buy into the trend, we should be able to ride the trend for a profit. The stronger the trend, and healthier the trend, then the greater the chances of longer term and better profitability.
 
The symbol at right represents the "3Ways" Rule. Note the following:
  • The upper zig zag line represents the simple uptrend - higher highs and higher lows.
  • The lower zig zag line represents the simple downtrend - lower highs and lower lows.
  • The middle zig zag line represents the non-trending price chart, where there is not a clear trend in place.
  • Notice that the downtrend line has dropped further than the uptrend line has risen, and in a shorter time. [Up by the stairs, down by the elevator.] In mathematical terms, this would be described as a steeper gradient.
  • In the diagram, this pattern is enclosed in a triangle shape with the tip cut off (technically it is a trapezoid, but we won't let that bother us). On price charts you will from time to time see various triangle shapes, but flipped with the pointy end to the right. The triangle chart pattens deserve a whole lot of separate discussion.
  • The triangle shape shown here is more like a megaphone chart pattern, or broadening wedge. A pattern that is not very common on price charts, but which does exist.
For more details about the 3Ways Rule in 3Times, see the Members' Area of the Share Market Toolbox - you will need to use your Share Market Toolbox Member username and password - if not a Toolbox Member, consider joining now.
The "3Ways Rule" symbol
(basic version)

Brainy's 3-Ways Rule.


See the Members' Area of the Toolbox
for a lot more detail, including
the complete coloured version and
explaining all the elements of this symbol.
As well as the relationship to Dow Theory.
Whatever you read on this topic, and wherever you read it,
there are some people somewhere who might try to tell you that it is rubbish.
Everyone is entitled to their opinion.
What they really mean to say is either "it is not for me", or
"I do not believe that to be true" (because they have not yet been convinced).
The bottom line is: "There is not one right answer, and different people have different opinions."

The information presented herein represents the opinions of the web page content owner, and
are not recommendations or endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor should be engaged.


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Copyright 2010-2011, R.B.Brain - Consulting (ABN: 52 791 744 975).
Last revised: 28 February, 2011.