Trend lines are easy to draw with Price Gauge, a formula study you can add to your eSignal application. Not only that, but the easy placement also gives you additional warning of a price reversal. Take a look at the chart for JNPR and the two blue trend lines. The trend line on the price pane was drawn in the conventional way, using the lows of the bars at 9:32 and 9:44 a.m. on August 22, 2005. At 10:20 a.m., this trend was broken, and the price was already in decline. Here, you may have difficulty selling your long position because the strength is beginning to wane.

Now look at the trend line on the Price Gauge. It was drawn using the same lows of the bars at 9:32 and 9:44 a.m. At 10:08 a.m., the Gauge broke below the trend line. Price Gauge warned you of the coming reversal a full 12 minutes before it began to occur. This is plenty of time to decide your next action, whether to sell and stay flat, or sell and then sell short. Selling short would be less difficult because there was still some buying strength remaining between 10:08 and 10:18 a.m.

When price movement is choppy, the Price Gauge can help. On the INTC chart, we went to the previous days and found the typical (typical, not unusually large or small moves) and drew two horizontal ray style trend lines right on the Price Gauge, one above the zero line and one below. (They should just intersect with the highs and lows of the Gauge bars.) These rays will extend automatically as the chart progresses.

Now, you can make trading decisions easily, trading when the Gauge bar moves above the upper trend line on a high or below the lower trend line on lows. The zero line can also be considered a trend line because the price is usually moving up when the Gauge bars are above it and down when the Gauge bars are below it.

These are only two of the many ways Price Gauge can help you improve your trading. Use of trend lines, strategically placed on the Price Gauge, lets you see the price movement in a way that no ordinary chart can display. This unique display gives you knowledge of what the price is likely to do next, a very powerful factor in trading.

*Please feel free to print this article and the charts for reference. Good trading!