So far I’m pretty happy with my HP computers, so I decided to take
a look at that company’s daily stock chart for some market geometry. In
Figure 6-19, we needed only four points to run the price relationships. A
price cluster developed in the 32.66–32.83 area. In most of my chart examples,
I’ve attempted to make the charts clean and avoid showing the overlapping
price relationships, which typically make prices very difficult to
read. However, that is exactly what we are looking for in a price cluster. We
love it when the prices overlap nicely. It means that we have a beautiful
confluence of price relationships. (It’s hard to explain to your editor that
the prices are supposed to be unreadable! I’ve chosen not to doctor up this
example to show you what it should look like.)
The price relationships that defined this cluster were:
.618 retracement of the 6/21/06 high to the 7/18/06 low = 32.66
(point 1 to point 4)