The 4 week rule

Anyo said:

Hi - I have read 'The 4 week Rule' which states: When prices hit a 4 week calendar high go long, and when they hit a 4 week calendar low go short - i.e. stop and reverse.
I can't get my head round this since to reverse from a high is to go short and vice versa.
Can anyone enlighten me please?

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TheBramble said:

This is of Donchian extraction and you're not talking about a stop and reverse. It's suggesting that a new 4w week low will more likely lead to further decline and a 4 week high will likely lead to further advance. Nothing to do with stop & reverse.

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TheBramble said:

This is of Donchian extraction and you're not talking about a stop and reverse. It's suggesting that a new 4w week low will more likely lead to further decline and a 4 week high will likely lead to further advance. Nothing to do with stop & reverse.

Click to expand...