Interpreting Precision Turn Charts

Turn Classification

Turn dates mark a transition between different types of market price behavior as shown by the six cases below. Our indicator will give the timing and magnitude of these trend changes. It is left to the trader to determine which category of turn has occurred.

Turn Timing

Turn dates are shown by spikes on the indicator. The actual trigger comes as the indicator drops from its spike high. For complex cases where there is a broad spike, use the last day as the trigger point.

Turn Importance

The importance of a turn is proportional to the height and breadth of the spike. For simplicity, we consider spikes that penetrate the center line of the graph to be major and those that peak below it to be minor. In the case of a major turn, the trend change should be noticeable on weekly and possibly monthly charts.

Over the years we have compiled a number of helpful interpretation hints:

• If a chart is showing many clustered spikes that run into each other, expect a choppy market and wait for the last spike before entering a trade.
• During a period with no turns indicated it is not uncommon to have a smoothly trending market.
• If a market has been quiet and trendless and Precision Turn gives a signal, set a buy stop above and a sell stop below to catch the coming breakout.
• A large spike in a noisy chart is as important as a minor spike in a quiet chart; evaluate the signal-to-noise ratio.
• The bigger the trend change spike the more error there could be in the actual turn, up to a maximum of about one week. Generally the error is no more than one day.