For many major global markets -- like the DJIA, S&P, FTSE, NIKKEI or Shanghai Composite -- 2010 has been a year of indecision. They've teetered between gains and losses all year in a long, sideways move.
Then there's Greece. The country's stock index, the Athens Stock Exchange (ASE), is down over 50 percent since mid-October 2009.
Earlier this year -- before the Greece debt crisis was on everyone's mind -- the movement of Greece's ASE provided Elliott Wave International's European Short Term Update editor Chris Carolan an opportunity to teach his subscribers about one of the useful technical indicators that he likes to combine with Elliott wave analysis -- Keltner channels.
As you can see in the chart above, the ASE kept pace with top of the Keltner channel when prices moved up to the October 2009 high. Prices then turned lower and bounced off the bottom of the Keltner channel around the beginning of November. After a slight tick up again, the ASE rode the bottom of the Keltner channel until mid-December 2009, inched up, grazed the top of the channel and retreated once again.
What does all of this mean? Much! The interaction of the price and the channel can help you determine whether the unfolding Elliott wave patterns are impulsive or corrective. In impulsive waves, the channel "bends": Visually, it appears to "accommodate" a price trend. In corrections, prices reverse and cross the channel.
When you can differentiate between an Elliott wave impulse and correction, you can determine the larger trend. And that's what investing is all about, isn't it?
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