|
|
|
|
To draw Relative Retracement,
click 
, or choose TD Rel Retracement from the Trend Lines Menu.
TD Relative Retracement is a purely objective or mechanical method for displaying Fibonnaci retracement levels from designated lows and highs. These levels define areas of support or resistance. Retracement levels will appear as dashed lines until price penetrates them and is preceded by a qualified bar. Retracement levels are calculated as follows: from a low bar, refer to the last time a lower bar appeared and select the highest high between these two points and subtract the difference between those two points or from a high bar, refer to the last time a higher bar appeared and select the lowest low between these two points. By placing the cursor on these lows or highs and by selecting the desired Retracement settings, the levels are presented graphically.
The Relative Retracement study is an Aspen trendline draw function. Selecting TD Relative Retracement from the Trendline Functions menu prepares the trendline cursor to draw the Relative Retracement. Clicking on a bar in the chart defines an anchor point, or reference bar, for the retracement. The Relative Retracement requires that the selected bar be either a Qualifying High or a Qualifying Low as defined by DeMark. Aspen will not draw the retracement if the selected bar does not qualify.The retracement lines can be modified or deleted in the same way as other Aspen trendlines, and their respective retracement levels are available in the cursor window.
A click is assumed to refer to the high, low, open, or close of a displayed bar; the software locates the nearest such point and uses it as the exact reference point. To be more precise, the software first finds the horizontally nearest bar column, then chooses the vertically closest reference point within that column. If multiple data items are on display, the one with the vertically closest reference point is chosen. (Formula data items are not eligible to be chosen.) Only high and low points are eligible.
For further information on Relative Retracement, please refer to Thomas R. DeMark, The New Science of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 2.
Parameters
The TD Relative Retracement study also has Date and Time parameters, which identify the date and time of the reference bar. As with any trend line drawing function, the process of drawing a Relative Retracement study involves selecting a reference bar, and selection specifies the Date and Time parameters.
This trendline type draws one or more horizontal lines representing fractional retracements of a prior price excursion.
Given a selected high or low (opens and closes are not eligible anchor points for this study), the software looks back for a prior bar having a higher high or a lower low, respectively. If no such bar is found on the portion of the displayed chart, no line is drawn because the software does not look at the data that is not displayed. Having found such a bar, all the bars between that bar and the anchor point bar (inclusive) are scanned to find the bar having the lowest low (if a high anchor) or highest high (if a low anchor). The close of that bar is taken as the magnet price.
A trendline is drawn from the anchor point bar rightwards to the end of the visible chart or until one of these conditions occurs:
The
trendline is penetrated by a price bar (price falls below the trendline,
in the case of a trendline below the anchor price, or exceeds the line,
in the case of a line above the anchor price). Penetration must
be by at least N ticks, for selectable N. Optionally, penetrations
may terminate the line only if they are "qualified," using the
same three rules that qualify breakouts for TD Lines. As with TD
Lines, the three TD Retracement Qualifier conditions can be individually
enabled or disabled, and separate penetration distances are supplied for
TD Retracement Qualifier rules 2 and 3.
The trendline is canceled according to one of the same three optional cancellation rules available for TD Lines.
Trend Line options include:
Number of ticks needed to penetrate trendline.
Whether to continue past disqualified breakouts.
Enable/disable three TD Retracement Qualifier conditions (as per TD Lines)
TD Retracement Qualifier penetration parameters as per TD Lines.
Enable/disable three cancellation conditions (as per TD Lines).
For each fraction level, whether to draw a line and a line color.