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standard deviations   above and below a moving average of price

More importantly, one can combine on one graph other indicators and technical aids together with the Midas S/R levels. The third   figure gives an example of this for Western Digital (WDC). Here we have defined three windows, one for an MACD histogram,   one for on-balance volume, and the main window for the price and other technical aids. In addition to three Midas S/R levels, we   have included conventional trendlines (straight lines joining peaks and troughs), so-called Bollinger Bands (2 standard deviations   above and below a moving average of price), and bullish (green) and bearish (red) flags derived from Japanese Candlestick pattern

recognition software.

Focus particular attention on the March 1995 time frame. The price has consolidated down to the primary (S1) Midas support with   a degree of porosity similar to the previous contact (in May-June 1994). When the three bullish candlestick signals appeared, this   became a compelling buying opportunity (especially the third such signal at which time the price was simultaneously at both the trendline and the lower Bollinger band).

The key to profitable trading using Midas is to have a sufficiently large number of stocks under surveillance, so that when such   "golden opportunities" come along - as they surely do from time to time - one can recognize them as such and concentrate enough   buying power on one's position to take full advantage of the situation. This leads naturally to the question "when should I sell?".   We'll discuss that in the next article.

The insights into the underlying structure of price behavior provided by Midas should be viewed as yet another instrument in the   toolbox of the technical analyst. By itself, Midas is not the key to instant success in trading; but when used skillfully in concert   with other techniques that one has already found to be useful, it can provide the additional edge that is needed in what has become   an increasingly sophisticated and competitive zero-sum game.

In the previous article, we have seen how intragroup comparisons and synergistic use of other tools can increase one's chances of   identifying potentially profitable trend reversals. (While we have emphasized entry points for long positions, the inherent   symmetry between support and resistance hierarchies in the Midas method allows the same methodology to be used in trading the   short side). Having thereby determined "when to buy", we raised the companion issue of "when to sell". In the course of   examining this question we will come to recognize some more fundamental structural orderliness in price behavior - i.e. beyond

the mere existence of the S/R hierarchies.

In the early articles we have already cited some qualitative indications that a bull move is running out of steam: deterioration of   the obv curve (i.e. obv starts to trend downwards while the price is moving sideways) or the appearance of fourth, fifth and even   higher order S/R levels. Now we know to watch out also for bearish indications in the peer group of stocks, and for ancillary   signals such as trend line penetration, classic chart reversal patterns (e.g. "head and shoulders'), and Japanese Candlestick alerts.

But does Midas itself have anything new to contribute in identifying sell points? If one is trading a bounce from a theoretical   support level during a pullback from a recent high, we have already seen many times that the theoretical resistance level   "launched" at that high is a viable price objective for the bounce. This is evident in the Midas chart for Cooper Companies, for   example, in the bounce from S2 to R1 at a cumulative volume of about 290,000 (round lots).