Ask Colin

I have been reading with interest your article about Short-Term Trend Analysis in the May-June 1999 edition of the Your Trading Edge magazine. You use a daily chart to illustrate your technique, however can you please tell me if it can be applied with any reliability to intraday five-minute charts?

The concepts explained in this article are basic to the idea of what a trend is. Trends exist in many time frames and are analysed the same way in each as far as the aspects discussed in this article are concerned, because they relate only to highs and lows of the bars.

However, there are other aspects of short term analysis that relate to the opening and closing prices. Their potency is predicated on there being a time interval between trading sessions. This is not the case with five minute bars, so care should be taken with such analysis. For the same reason, care needs to be exercised in using some aspects of candlestick charting, because of its emphasis on opening and closing price relationships.