Most of that which follows is based on our own research in the creation of the automatic trending system
for the TradeGuider computer program, which in turn will create the automatic trend clusters.
The principle of trend clustering is very much a part of TradeGuider. The strange apparent support and
resistance offered by old trend lines on a chart, some of which may even be several years old, have been
observed by chartists for many years. In the days before computers, one had to draw trend lines on hand
drawn charts well into the future.
The facility to have large numbers of trend channels drawn and stored by a computer (a unique feature of
the TradeGuider program) enabled us at first to attempt to mark where old trends passed through the
leading edge of the chart. The idea behind this was to see where a sharp down-move might encounter
resistance when the market was heavily oversold.
The results are quite astonishing. The examples that follow are perfectly genuine and far from unusual.
Each block represents an area where TradeGuider has sensed old intersecting trend lines. What is even
more remarkable is that TradeGuider draws the blocks using only trend lines that start prior to the current
page, and knows nothing about the current chart displayed except the upper and lower vertical scaling
limits