Michael J.

Parsons

The theory behind this entry is based on the tendency of price to return
to kiss the previous channel good-bye. Most of the time price will never
actually reach a previous channel l ine, but it will often make a great effort
to do so. As a result, a smaller channel will develop that will angle toward
the previous trend. The outside li ne of this smaller channel will often be a
l ittle hazy, but the inside line (which is the line we are most concerned
with) will usually be quite easy to define with a simple trend line. When
this smaller channel l ine is broken you then enter in the direction ofthe
break or opposite of the previous trend. Figures 1-10 and 1-1 1 illustrate
tbis entry.

� Secondary Channel that rebounds

back toward the original channel

Original channel

t�t I Enter at the break of

Secondary Channel rebounds

back toward the original channel .r

Ford

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