Ask Colin

I have a query arising from the Shares Magazine September 2001 issue. When you speak of a Basic Uptrend such as in the diagram on page 76, over what length of time is the best measure? - 6mths, 1yr, 2yrs? - You haven't put a time limit on the diagram. For example, do you only look for a Basic Uptrend in a company that has been trading for over 5 years or so?

The question of time frame is one of the more difficult ones to resolve in charting.

You should start with the big picture. One of the most important elements to sound chart analysis is to always start with the long term chart and work in towards the short term present time frame.

So, ideally you would have a 10 year or more history (or as long as the company has been listed if less that 10 years). You would display this data as a monthly bar chart. Look for the big trends and also for shorter term trends that are obvious on that chart.

Then move to a weekly bar chart of about five years duration. Try to have displayed the last major top and bottom in the market if you can, but at least one of them. Look for the biggest trends on this chart and then for shorter ones that are obvious on it.

Finally, move to a daily bar chart with about two year's history on it. Again, try to have a major top or bottom on the chart if you can. Look now for the current trend.

This will not solve your problem, but it will help you to see the context of the current trend. In particular what larger trends it may form part.