Question of the Week: 8/6/2008
When plotting wave charts (as described in Chapter 2 of MEW), what happens if the high or low of the day, week or month occur twice (e.g., a low occurs March 1 and then March 31)?
No matter what time frames you follow (hourly, daily, weekly, monthly, etc), you have only two ways to plot them. If the high or low clearly came first and the trend for that period is basically one directional, then you simply plot the high and low in the order they occurred.
If a high or low occurred twice (or nearly twice) in a month (I'm using a month to make it easy to understand), then you need to examine price action to see which order will produce the most accurate representation of that month's price action. For example, if Gold bottomed at $400 last month, then $401 the 1st of the new month, rallied to $500, then dropped back to $405 the last day of the month, plotting $401 first doesn't help much since it basically repeats the already-plotted low at $400. So, in this situation, plot $500 first and $405 second.
On rare occasions, if it is the only way to accurately represent price action produced by the market, you could consider triple plotting (which means 3 data point combinations - either Hi-Lo-Hi or Lo-Hi-Lo). If you triple-plot, make sure all three plots occur within the time span normally reserved for two data points. NOTE' You should never attempt to plot 4 data points within one time frame.
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