Creating Parabolic Trendlines

In physics, an object that is accelerating will often appear as a parabola. Parabolic formations can also sometimes be observed in stock market trends indicating that the rate of change is increasing, ie accelerating.

BullCharts allows you to construct parabolic trendlines. Figure 1 shows a parabola fitting the lows on a KZL daily chart.



In the same way that it takes two points to described a line, it takes three points to describe a parabola. To draw a parabola, follow these steps:

1. Select the parabola tool, located with the shape drawing tools.
2. Click three times on the chart at three separate points. It is important that none of the points are on the same date. Tip: Use snap to price to exactly lock onto price points.
   
3. A cross will mark the first two clicks. Once the third click is made the parabola will appear that passes through the three selected points.
   

Once drawn, the parabola's three handles can be moved around much like the other drawing tools. Options are also available in the parabola properties to extend the parabola to infinity in either direction.

Can we have an option where we can increase/decrease the speed of the parabola? This is seen in FoxCharts and Market Analyst.

damo

Daryl Guppy's charting package also has a parabolic tool, but it seems to work differently.




The top chart is BC. The bottom one is from GTE Tool Box. I showed the differences on the charts. My main point is that the timing of exit is different, depending on what program you use. What do others think?


Edited by Owen

Brendon you are right! I love Bullcharts even more now.