hello guys welcome to this uh welcome to the second video uh where we are reading chapter two from it's about to happen let's get started chapter two trying lines so much of trading and technical analysis looks easy on the internet for example so you can uh you can find all sorts of trading systems showing how trades were initiated at Point a and sold at point B for a three thousand percent property in only four months a book on technical analysis might glorify buying breakouts or the breaking trend line Trends to require breakouts in order to pursue but unfortunately many the penetration of a trend line perceived currency is little what what preceded the trend line break and the way it occurred reveals more then we have the Skeptics who fall back to the old saying saying lines are drawn to the broken so what price movement evolves and really wrong throwing support and resistance lines might seem the subject of charting 101 some say it's for beginners but you would be surprised by how many people cannot tailor the placement of their lines to highlight the behavior in a trading range ever even even fever have learned to recognize horizontal lines around which prices have revolved let's first look at a typical trading range and imagine we are we are examining figure two point one figure 2.1 level three communications from the Viewpoint of the rightmost today December 26 2003. December 20 03 okay we see a great deal of lateral movement after the September 25 hi after September five five September 25 High resistance 9 is drawn for instance line is drawn across this High and the initial low on October to the law on October 2 serves as the support line so what we have here is foreign now what is saying is a resistance line is drawn across this High and the initial low on October 2 serves as the support line yep if I did I choose these two points for resistance support levels you might ask the high and the low on October 15 and 24. 15 October 2015. and 24. 24 could have won equally well right this and this could have worked equally well maybe even better as the top occurred on 15. in real time right this in real in 15 in real time they might have framed the trading range with with the October high low okay but looking in retrospect from right to left from right to left the two board lines tell a better story they dramatize the failures in October and November to move upward or lower at two at two of these points the sellers attempted to take control of the stock and drives Drive prices lower okay what is saying is at least two points is first sellers sellers are tempted to draw the price lower and at this point second October the seller and the buyers attempted to take the market higher okay all right now each time however the buyers check the tech lines and prices recovered okay fire did check the decline right here and check the decline and prices did recover for new high right and now what we have is this is important information it tells us buyers remain dominant the support line brings the struggle between the buyers and sellers into Focus okay during the latter half of December in the latter half of December 2 days notice the lifting of supports as the buyers gradually overcame the selling pressure we do see the lifting of support here the number one this is the December one lifting off now this supports as the buyers gradually overcame this such as such a sustained rise in price with most of the two which is near the daily heart tells a more police story than white Flair then White Flame action indicates the stock is in strong Okay so yeah we do see the complete story by drawing support and resistance now let's move to the next paragraph the resistance line the resistance line drawn across September 25th September 25th here December 25th I was penetrated on October 14 October 14th it did penetrated here right and at written this resistance line where prices registered their highest flows their highest close at this point the buyers were seemingly in control on the following day however the sellers turned back an advance back the advance and throw prices back down in the treading range and then the next day sellers came in and they took the prices down and closed below and it you know closes below that trading range this is our trading range without trading area between support and resistance draw a rectangle without it yep so we see that we did process below right this this reversal action certain apart from the August flow like August low okay this one until prices refused to break down on October 24th this one it went down right and tested this this trading ring that's doing this trading Ranger software trading range okay so this reversal action threatened the upward uptrend from the August low until prices right until prices refuse to break down on October 24th okay here and November 17th till we re-tested this this you know this trading range if we extend this trading range we did retested this trading way see we just touched down here and then bounce back tested here and then bounce back okay so notice the October High October hi here has not played any role during this trading range a line of resistance did from across the November 4th and number four yep I as it blocked the two rallies in December right as it blocked the two rallies in December in December it blocked two rallies here here and here right it marked the high of a trading range that began from the October 24th low okay so this one October 24th low we you know it marked the high of a trading range that we gained from the October 24th so there is new trading range forming here we can see here okay and then what we uh right it might be high of a trading list that we can from October 24th is not uncommon to see trading ranges within larger range especially when they spend several months okay so basically saying that you know PC trading ranges within larger trading revenues right let's let's move see the trading range in tell me LT spend about 20 of the October Peak price we have to consider it if it off intermediate size on hourly charts we find many small trading ranges That Swing less than one percent from high to low this may this may last only a few days at most while the support or resistance lines may not always tell us well as we made a story about failed opportunities as we saw in LV LP then do so the case of a downtrend the steady progression of lower lows and lower eyes right as as demonstrated on the at Nicole Eagle mines hourly figure 2.2 here this one the lines reveal how prices interact with previously Drawn Lines okay these lines reveals how prices interact with previously Drawn Lines okay trading range AA Dash a a dash combinates the chart it contains a smaller this trading range the larger trading range right which demand which dominates the chart and it contains a smaller ranges like B and C so what we are doing is have this trading range we have this larger training range right and then we have the smaller trading range now things go contains a smaller range PC which fails which fails to support the market right so it basically this range failure to support the market and it went down right forming a new trading range okay but the breakdown to support line B leads to one last rally into the larger trading ring right this one this rally all the trading range this rally ends with an upward bike on January 17th upward Spike on January 17th this one 2012 right so we close on this price for reveal the presence of selling so the week close this one is so we close on this price but reveal the presence of selling support line D also serves as an axis line as price is repeatedly tried to recover from below it okay so this support line D also serves as axis as price did try to you know um repeatedly tried to recover from it okay required from below it right below it the last of these occurred on the up moon from the port lining right the cost of the last of these occurred on this up Moon from support line e by drawing these lines the trader can anticipate price swings to Peak or bottom around previous support or resistance lines they become an important part of a Trader's Arsenal especially when combined with Trends lines 10 lines channels price volume Behavior okay we are laying the background here and what we are observing in the market is basically by drawing these lines the trader can anticipate price swings to Peak or bottom so you know after drawing this support lines what we are observing is price 10 to you know come to these areas today's State and you know recovers from it or go below it above it you know basically the market tend to follow this you know these structures okay have this trading rage bigger trading range here then we have this trading range here okay so saying that after by drawing these lines the trainer can anticipate price swings to Peak or bottom around previous support resistance right so we can basically you know after drawing this we can say that you know we from Peak here we from bottom here we draw the support this range right and we the market can Market will you know revisit this area of support and resistance as we can see here it visited this area after really well first created within the range then it went down and then it went up testing this resistance area and then it again from this new support line at Sea and then it Formed new resistance line on the Peak at B so it goes on like this okay and we see that when we see trading ranges within trading ranges right so they become an important part of a Trader's Arsenal especially when combined with trend lines channels and price volume Behavior okay now some of the most useful access lines appear on daily charts on the March 2006 Bond daily chart figure 2.3 resistance line a since line a drawn across the latter 2005 High 1005 5. Okay so we are doing this after drawing this line now provided support line is on the March 2006 born daily chart figure 2.3 resistance line a resistance line a okay thrown across the late November 2005 High November 2005. hi here provided support line in January 2006 so in 2006 provided the support line in January 2016. and resistance twice in February 2006 right and this resistance in this work that is in 2006. February the two rallies in February were tests of the breakdown below line a the two rallies in February but these two Rally's in February okay for the test of the breakdown below line a okay so this was the test of a breakdown below line is this the axis line alone does not reveal its strength or weakness nor does it signal to buy or sell it simply shows a level that has repeatedly served as support and resistance prices may have revolved around it for several weeks or months many times the final rally in a top formation are the final downswing in a bottom we look at along an axis sign okay what makes this line most meaningful is the price volume Behavior around it but one first must learn to see the lines with practice you will be able to see all of the linear relationships at a glance okay let's move to the next paragraph when we draw these horizontal lines we repeatedly see the false moves on either side of a trailing of a trading range compared to the false breakout on October 15th in lblt figure 2.1 2.1 October 15th here for some false breakout here right come on with the January spike in March points okay this this is the bond so January Spike would be this one right and um all of these Behavior stands out with the aid of the lines notice the small trading range in lb LT during July August 2003 July August July August yep it's trading range and um it like the sell-off on November 17th like the sale of on November 17 right it tested this area of this range right that's what it's saying now it like the cellophane I'm only 17 led to a bullish turnaround after a false breakdown right this one please turn around after a false breakdown this one and around after a false breakdown here so what what we are seeing here is which led to a bullish turn on after Falls background fitting ranges are horizontal patterns they are resolved in three ways a long drawn out period of lateral movement that tries out the most die-hard Longs by the formation of an apex in which the amplitude of the price swings Narrows to a point of equilibrium or a false breakout or breakdown in the chapters ahead we will explain much more of this Behavior trend lines debate the angle of Advance or decline they are Dynamic support and resistance lines as opposed to the static horizontal lines that that frame trading ranges in a downtrend a trend line is drawn across successively long lower highs okay so in a downtrend a trend line is drawn across successively lower highs so basically you know we know the you know the how you define a trend is if you like an uptrend is formed when we see higher highs and higher lows a downtrend is formed when we see lower lows and lower highs so it's basically saying uh is that concept okay so you see in a downtrend a trend line is drawn across successively lower highs it seems uncanny that a trend line can be drawn across highs for example in January and March which later provides resistance in July and September the resistance points in July and September are known as touch points okay so we gotta do this July and September right um resistance line in July in September provides us you know touch touch points right these touch points for this for these two tests see the market did did test it did touch this trading ranges okay here so which later provides resistance in July and September okay the resistance points in July and September are known as touch points that is places within a trend where rallies halted means the rallies have been halted he stopped there against the trend line right touch points okay uh uh all right touch points touch points add validity touch points and validity to a trend line in an uptrend a trend line is drawn across the rising supports it is called the demand line as it marks the point where buying repeatedly emerges similarly the downtrend line across high is called the supply line as we will discuss as will be discussed there are combined these are combined to create Trend channels let's begin with some samples of uptrend lines normally they are drawn from the low point of a decline okay so generally these are you know drawn from a low point of plan okay so what we are doing here is we see the slow point of a decline we draw line from it combining the slow point of decline to draw this line forget that this this happened right forget that this happened okay you can basically you know see this one right and then this is demand line okay is online we are buying a card we are buying a third okay foreign now so we begin with some that we are beginning with some sample examples of uptrend lines normally it is drawn from the low point of a decline right we do not want to draw a trend line through price moment okay so it's basically saying we don't don't want to do this right you know the middle of price moment okay so there's that uh the demand line okay we do not want to draw a trend line through price moment to reach the second Anchor Point on The Daily continuation chart of the 10-year treasury note figure 2.4 we see the simplest uptrend line the lows of November 4 th and December 5th serve as the anchor points this line provided support on three additional Corrections although right this line provided support on three additional Corrections like one two and three we see this right it's providing support there okay so although although price broke slightly below the line at point three they quickly recovered to make a new high you can immediately see the inherent risks in automatically going short slowly slowly on the penetration of an uptrend line as previously stated the behavior prior to the trend line break and the way it occurs tell the story after you finish reading this book The bearish behavior prior to the January 25th breakdown will be apparent right okay so this is what is saying this one after reading this book will you know the bear is behavior of the prior to the January 25th this year will be apparent two months later the ten year fell below 10 524. okay no the trend lines are drawn from the perspective of the last day on the chart one looks across the chart like a surveyor taking Outland for development okay a second daily lb LT chart figure 2.5 shown through December 1 to 2005 Looking Backward we feed a minor trend line onto the rally from the October low we do not use the precise low as the first Anchor Point this one okay if we did the line would not fit the angle of Advance instead we draw the line from the low of the fourth day 0.1 if I step upward if I steep uptrend line a is drawn from this low it will pass through price moment right this one from point A and this will you know pass through price moment so we we don't want to do that so we we seek next point right the low at point two is a better second anchor for the line is free and clear of other prices and it later provides support at point three right so what we do is we draw a line from a angle sign from point A to 0.2 you know going as far as we can right now so it later you know provides support at line at point three right one more Factor at point two we do not know prices will continue upward connecting points one and two creates a creates a tentative line until I can one right so it creates a tentative line until the high at B I at B exceeded right okay okay a rally above B so Connecting Point one and two creates a tentative line until the high at B is at is exceeded okay okay a rally about being constitutes so it's basically saying that you know it's high at B is exceeded here at Point from point three right so Connecting Point uh uh one and two creates a tentative line until the high at B is exceeded right a rarely above B a rally above B constitutes an uptrend okay so rally above B will constitute as an uptrend okay this you did see the channel right we draw like this okay so this will construct as a uptrend okay now um a rally above B a rarely above B constitutes an uptrend I'm not as I'm not so terribly busy for the line can always be returned later if one applied the same reasoning to the 10-year chart figure 2.4 the uptrend line would not be confirmed until the rally in late December late December Israeli exceeded the November High this one okay because the December touch points at 1 and 2 holes along the line right I would not hesitate to draw it yeah do not hesitate so if LV LT figure 2.5 had immediately rallied about 58.95 this one if lb LP figure 2.5 had immediately a rallied Upon A 58.95 after December 1. the trend line should here would no longer depict the angle of Edward yeah okay a new line drawn from point one would not capture the angle of advance so right if if this if this you know goes about this point right one suppose like this right then this one cover that you know this won't be a valid line or type yep you know depict the angle of Advance a new line drawn from point one a new line drawn from point one would not capture the angle of N1 this also occurs after lengthy periods of lateral movement within a larger uptrend the monthly chart figure 2.6 here we are moving to next point the monthly chart figure 2.6 this chart here let's draw a rectangle that would destroy okay the monthly chart figure 2.6 of the door from the March 2003 low provides a good example here we have a here we have an uptrend line drawn across 2003 and 2004. close okay so this low 2003 and this 2004 lows we have an uptrend line on here right this one you see the line not necessarily be you know perfect line okay let's organic so um but the correction from the March 2005 High penetrates this line March 2005 correction penetrates this line right here and goes below in six months of lateral moment follow right and then there are six months of this lateral moment follows up and explore this lateral okay when the trend resumes we could redraw the trend line of the 2003 and October 2005 lows okay but it would be too shallow a better choice involves drawing a second parallel line and anchoring it off the 2005 low okay so it's basically this one right this maintains the original angle of advance but it did not do a good job of pinpointing the October 2007 I so what it's basically saying is you know if we have one angle of advance right here we do have one angle of that one so the best thing would be to you know pre-droid as same angle of Advance touching this lower 2005 so that we capture the same angle of Advance okay all right now reference to parallel lines brings us to the subject of trend channels in an up channel the demand line is drawn across lows and a parallel supply line is thrown across an intervening High figure 2.7 describes the anchor points and the order in which they are connected right so this one point one point drawn like this channel line then in the same angle of Advance we form the chain Channel as connecting the high and the same angle of advances okay you can quickly see this pattern by drawing a line across the high of point B on the LV LT chart figure 2.5 let's go and see if you got 2.5 then and B so we can we draw this line with same angle of Advance here point a one and this p say this we we do see that you know we do see that market testing this area of you know Supply right area of the supply and you know eventually going down okay this ideal up channel will have several additional touch points should capture most of the price work within its boundaries a rally above the top of an up Channel often a better overbought indication that most mathematical tools then most mathematical tools yet rally above a rally above the top of an up channel is often a better overbought indication than most mathematical tools like Rashi if you know about RSI RSI doesn't work like all the time right it doesn't have that depiction you know so here here we do see that you know after combining this we do see this Market has been overbought at this point and uh and we say that we can say that you know Market will Advanced downwards right and it did happen so this this debates the overbought condition rather than relying on RSI we see this you can apply this in any chart right and it works better than most mathematically Okay so that's so a more inter a more interesting set of channels appears on the daily chart of April 2006 live cattle 2008 figure 2.8 okay so this is figure 2.8 let me pull it up we're looking at this here now start cattle chart now um okay so here we have low points at one and two here we have low points at one and two in the early stages of the advanced right in the earliest stages of Advance we have 1.1 and 0.2 right which is two points and we draw an line with these two anchor points okay and we draw and we look for drawing a parallel Channel at the high of this okay so the parallel is not drawn across an intervening High instead it is drawn across the early October high at 90 cents right this October high at 90 cents okay so draw this line here parallel Channel and if the line had been drawn across the intervening high in late September this September High it would have you know involved in this price movement right okay the supply line would have passed through almost all of the price for we have to be free and creative with the placement of our lines at the same time we cannot force the placement you can readily see the trading range at the top of the chart okay see that you know there are trading ranges here it's testing this point you know touch points here a lot of touch points acting as a you know dynamic support and resistance line within this trading Channel this within this you know uh trendline channels okay thank you you can readily see the trading range at the top of the chart yes we can see that it consists of a false breakout about the high and a wide open break that penetrated the bottom of the range right we do see that you know this false breakout right this false Breakout occurring at many points in this line and I and a wide open break that penetrated and this wide open break which penetrated the bottom of the range right this one okay these were some of the clues that prices were turning down yep fire prices were definitely turning down and I cannot omit the Steep down channel to the April 2006 on this channel so right April 2006 love okay you can see the three anchor points and the enemy rally in mid-march notice how prices made upward progresses about about the minor supply line during this small lateral moment this one right this one in April prices plunged to the demand line this is demand line demand line you see the three anchor points and the enemy really in mid-march notice how prices made upward progress above the minor Supply this one about this minor supply line during this small lateral moment right April prices plans to the demand line and reverse upward okay supplies prices plunged up to this this demand line and you know it went upward okay this is the largest rally within the down Moon I hope you see the license taken within the anchor points used in this town Channel perhaps in real time I would have begun differently but once the contract broke below 90 cents the best channel would have become apparent okay this one below this which indicates that best channel would have become apparent to us okay paragraph something else has to be mentioned regarding objects Bobby wants one of the most prominent and enthusiastic teachers of the wife of course used to prepare cassette tips on which she discussed aspects of chart trading he devised colorful metaphors for describing different kinds of Market behavior in one of his most famous tapes he shared with his listeners a learning tool device by a former student was called the cell driver strategy and dealt with the behavior after breakdown below the demand line of an up Channel he he compared the markets rise within the channel to a diver Peak cells of the ocean floor and returns to the surface which is supply line okay so it's basically seeing the metaphor suppose this is the ocean floor right and this is the ocean top surface so by applying the metaphor suppose the shell is here we are picking shell shellfish here shells here and we are going to the surface of the ocean right which is our supply line so this is this is our supply line and this is our demand line okay now bring it back for reference where he places them in a floating basket okay so where he places them in a floating basket and if floating basket did fell down so let's just you know extend the metaphor and think metaphorically with some you know intuition that we have basket of then the ocean floor it might might go down and you know go down to a ocean floor again right and it might and when we pick it up the same ocean our cells be you know put it on basket floating basket up there in ocean right so this kind of metaphoric patterns happening again and again in an in an you know upward Channel or downward channel right depending on how you look at how you interpret the ocean right in this case we are talking of ocean in up upward Channel movement okay now let's move to the next point here okay yeah at some point during this activity he falls below his usual depth system online okay so this one we are talking about this one this demand line it falls below this demand line and develops a cram he tries valiantly to reach the surface but falls short and rolls over for the final time right okay this is what is describing so um he tries valiantly to reach the surface he tries valiantly to reach the surface but falls short and rolls over for the final time rules over on the cattle chart 0.1 marks the final attempt to reach the top of the channel from this tale we learned to watch the character of the rally following the break of the demand line is this team online this highlight if prices recover if prices recover and search to new highs the odds favor a resumption of an of the uptrend right if price recover and search to new High of this the odds favor resumption of an uptrend but it didn't happen right If instead of this it went like this it would form if would have you know resumption of upgrade okay and we would have drawn a new channel a new uptrend channel on the monthly chart of the commonly research Bureau prb index figures 2.9 again okay now see the non-infamily see the non-inflationary rise from the 2001 law is this 2001 low foreign fits beautifully within the up Channel originally drawn from points one two three okay notice the numerous touch points at later dates what we do is we just draw a channel with these points one two and three combining these three points one and then parallel to this angle of advance of okay 0.3 so now after the low in January 2005 when Energy prices began to rise exponentially the advanced Depend and prices traded along the supply line okay this is our demand line this is our supply line so prices are sped up traded around supply line a second parallel line is drawn from the high at 0.4 or second parallel line four and it stops the next two up more okay it stops the next two up moves here as Illustrated on the monthly Daw chart figure 2.6 up okay a second parallel line broadens a channel and provides a useful guide for moving price movement in the case of crb's index the lines do not indicate the uptrend has ended it is depend and con continued for several more years okay it did it was it indeed it was an uptrend okay one more type of line deserves attention it is the reverse trend line and divorce Trend channel the basic look is sketched in figure 2.10 so we are moving on figure 2.10 let's see we are looking here the 2.10 all right so we are normally drawn with dashed line it was trend line dash line set them apart from normal trend lines and channels right some of friends will not fit in the normal channels we have previously discussed okay because of their stiffness they require forming a reverse trend line across Rising eyes points one and two right to make a reverse of Channel a parallel line is drawn across and intervening lobe in the diagram 2.10 price does not interact with the lower line of the up Channel however in the future it could provide support many times a normal uptrend line will combine nicely with a reverse trend line to form converging lines some technicians refer to this as a rising wedge in the instance of an uptrend the converging lines often indicate a rally is filling or losing momentum when prices are falling within a pattern of converging lines it usually signifies the decline in near and low so the prices are falling within the pattern of converging lines okay so simply saying this okay we have this line then we have this line and they are converging like it's this this this right then it usually signifies the decline in nearly nearing a low okay meaning we might see a Breakout after this move okay so what we have here is foreign Channel in here foreign okay so this is our reverse up Channel your stone Channel converging lines this is so what it basically is is in order to draw reverse reversal can only need three points two hearts one low okay for drawing before Stone Channel we need to close one heart and for drawing converging lines we need two highs and two lows okay figure 2.11 let's draw our angle here okay figure 2.11 reverse Channel examples presents an unnamed chart with the three types of reverse trend lines channels mentioned above okay reverse 10 lines channels mentioned above here right it's basically indicating these three lines right so we have this first Channel okay first let's talk about downward channel for downward Channel drop hit three points right if you want to draw three channels like and you know this one one okay let's see what mentioned the decline on the left side of the chart fits into a reverse down Channel it is drawn by connecting the two lows and then the parallel is attached to the intervening High these two lows that's the than the speaker meaning High okay the reverse of Channel TC Dash is much steeper and price moves above line C okay notice the sell-off from this high phone support on parallel line C Dash okay so if we draw and your sub channel here from here to there right connecting this side to this side because we need 2 pi and one low we got one low and this is too high okay which is much steeper and price moves above the line C right this price moves Above This 9C right notice the seller from this higher form support on parallel line C Dash sell off from this line on the support on this parallel line C Dash a move above or below a reverse trend line often will Mark the end of a swing right this is very important which is saying among above or below or reverse trend line often will Mark the end of spring okay all right so this the movie is happening above here the more about this trend line will Mark the end of the Swing Swing high and need to sell sell off is happening here and it's finding the support here when when it's reaching here move from this support line is marking the end of swing low and it's going up right okay so I know an in ingenious Trader who has developed software showing how many stocks per day have raised or exceeded reverse trend lines in an uptrend a large increase in the number of these often indicates the market is vulnerable to a downturn line p b Prime do not form a reverse channel right line B and B Prime this B Plan B and this line B Prime do not form a reverse Channel line B is a reverse trend line chart find that line B is a reverse trend line that when combined with normal trend line B Prime forms the converging or wedge pattern okay so I have never considered chart patterns of any significance except for this one as it is most associated with ending action it cannot stress enough how often a move above or below or reverse trend line channel will lead to a trend reversal okay so you cannot expressed enough how often a moon above or below a reverse trend line a channel will lead to a trend reversal the standard and Poor's SNP daily continuation chart 2000 figure 2.12 shows the price movement after the August 2011 look okay this one so volatile trading range lose the price moment after the August 2011 low the volatile trading range a b was resolved by a Thrust to new laws and an upward reversal notice this reversal occurred after the break below the reverse trend line within the declining wedge patch so saying this one we have this channel here over here this channel right and then we have this reverse Channel first wedge one this then this this right and Market you know this went down and tested this port line a channel a Channel AV on support line a you know the reversal happened here okay so what is this reversal occurred after the break below the reverse trend line right below this reverse trend line within the declining wedge circles are drawn around the overshoot this is the overshoot at the October 4th low and the October 27 High Okay so we have again this line but what's going into seven this one the letter was about the reverse Trend Channel and resulted in this one panel now okay the letter was about the reverse Trend Channel and resulted in 142 point sell-off this one line B served as both resistance and support during the months shown here this line was the launch pad for a larger moon from the December low okay this one please be kind be served as resistance here here right and then respected as support here here right here here and here we have this rally okay the live cattle quarterly chart now we are moving to next chart the live Kettle quarterly start figure 2.13 those are reverse 10 Channel spending many years Looking Backward from the 2011 High 2011 High one can detect the reverse Trend Channel 31st and line a drawn across 1993. to 2003 High oh the vertical price rise now from this that concept we draw this channel finding too high and one low for Upward Channel the vertical price rise in 2011. 11 boost prices above this line the parallel a prime to this reverse trend line is drawn across the 1996 low here in this situation the line passes through some of the price moment but it was a parallel rather than a starting line okay you see how frequently the market respected the parallel line right see this one respected the parallel line very frequently okay yet it could not have been drawn until after the 2003 bye okay foreign across the 2002 and 2003 lows 2009 lows 1000 this one right this one 2003 and 2009 Channel [Music] and lows a normal up channel is drawn across the 2002 to 2009 lows P with a parallel across the 2003 high D Prime nine in this channel price rallied to the very top of this channel where we have a conference of lines okay together they underscore the magnitude of the potential extremity right the stock market raised a measure high in October 2007. and most issues declined accordingly one exception was us Steel 21 2.14 which Consolidated throughout 2007 it erupted in April 2008 and gained almost 70 dollar per share in the next two months this one 82 2007 was basically Consolidated right right then it erupted on April 2008 in 70 dollar first year Okay so price this year and then adapt it from there and from 70. okay per share okay the next two months all right so upload exceeded the confines of any normal luck Channel after the stock rallied about the reverse trend line here in June 2008 2008 the bullish Trend finally came to an end and price has collapsed as you can see exceeding up down reverse trend lines must put one on alert for a trend reversal okay no other trend line break has such predictive value yep now some price 10 some price trends the five channels here advance or decline is too steep to fit into a normal or broadened channel the uptrend on the weekly July 2006 sugar chart you got 2.15 between May 2005 between May 2005 and February 2006. suppressed Trends the high channels their Advanced or decline is too fit into a normal or broader obtained on the weekly July 2006 sugar chart this one between May 2005 and February 2006 sci-fi is the problem take a look at the five points table on the weekly chart only lines I can conceive begin with points 3 and 5 right a parallel line across point four fails okay fails to hold as prices soar Beyond its boundary I'm going to draw the second parallel line across point two the broadened channel does contain most of the price moment until the final High okay this may not be a totally legal way to draw a channel because the high of the second parallel occurred prior points three five okay because this high for Price 2.3 and 5 so it's not uh you know a legal way to draw or you know uh uh basically a right way to draw Channel but it works drawing support or resistance lines trend lines and channels normal Rewards or modern demands open-mindedness one must always consider other possibilities enough mechanics now enough mechanics now we are ready for the story of the lines right so guys this is the end of chapter two we studied drawing channels roaming reverse channels um drawing parallel channels drawing support and resistance lines right driving basically identifying trading ranges so that's the wrap of chapter two and tomorrow we're gonna be reading understanding chapter three the story of the lines so now thank you I'll see you bye