Weekly swing invalidation and the trailing stop

One chart for the main trend

A weekly swing chart is a directional map of successive weekly extremes that flips only when the prior week's high or low is taken out, then runs to the next opposite extreme.

The weekly construction is presented as a trend-following device whose job is to identify the main trend and keep the stance aligned with that trend, whether the map is pointing up or down.

How the weekly turn is printed

A weekly swing chart is described as turning up from an extreme low only after the issue trades above the highest price recorded in the immediately prior week.

After an upward turn, the same weekly map is described as remaining up until price falls below the lowest price seen in a prior week, at which point the chart turns down.

A Gann-family timing method with a rank among time spans

The weekly swing chart is presented as one Gann-family timing method among many related swing constructions, each flipping on its own rule set, and as the single chart the writer would keep if forced to use only one.

Swing charts that cover longer time spans are presented as giving stronger directional signals than shorter-span swing charts, so a weekly signal is treated as stronger than a daily signal and weaker than a monthly signal.

In the sense used here, Gann angles are a Gann-pattern timing method that reads OHLC structure and chart scale to turn a repeatable condition into a directional hypothesis over horizons from a session to several weeks.

The stance follows higher bottoms, then higher tops

An uptrend is specified as higher bottoms and then higher tops, not merely higher tops followed by higher bottoms.

A break below a prior swing-chart bottom is treated as a signal of at least short-term lower prices and a possible change from uptrend to downtrend.

The main-trend-stance is the single long or short posture the weekly map is meant to keep aligned with that sequence, or with lower tops then lower bottoms when the map is pointing down.

Park the trailing stop just beyond the last confirmed extreme

While the weekly stance is up, the protective stop is raised to just beneath each newly confirmed higher swing-chart bottom. While the stance is down, the stop is lowered to just above each successive lower swing-chart top.

The trailing stop parks invalidation just beyond the last confirmed swing extreme and moves only when a newer extreme in the same direction is printed.

Treat a stop through the last extreme as a reverse

A stop through the last swing extreme is treated as a reverse: the long is exited and a short is opened with the new stop just above the prior swing top, or the mirror process is used after a short is stopped.

That stop-and-reverse rule both exits the open stance and opens the opposite stance, with the new stop placed just beyond the prior opposite extreme.

The weekly walk-through

In the weekly walk-through, a decline through the prior week's low of 39 flipped the chart down, and the map stayed down until a later week exceeded the immediately preceding week's high.

Editorial note: construction comes first in that sequence. The down flip is the invalidation of the prior up stance. Only after that print would the trailing stop be walked down just above each new lower swing-chart top, and only a later trade above the immediately preceding week's high would reverse the map again.