DT Andrew Channel

Dynamic Trader Software Example - Aug.
1997
Andrews Channels - www.dynamictraders.com
Copyright 1997, Robert C. Miner
Dynamic Trader and Andrews Channels

Version 1.1 of the Dynamic Trader software includes the traditional
Andrews Channel drawing routine as originally taught by Professor Alan
Andrews. Version 2 of Dynamic Trader (due for release in mid-Oct.,
1997) will expand on the Andrews Channel technique with the Fib Median
Channel, a routine unique to the Dynamic Trader program.
Andrews Channels and Parallel Lines are an excellent, geometric
charting technique for indicating in advance areas of support and
resistance and whether a market is strong or weak. They are valuable
because their construction is derived from the form of the current market
activity and are constructed in the initial stages of a trend. They are not
fixed relationships, but are market driven. A market is a growing, evolving
process that continually redefines the nature of the future growth.
DM: Weekly Data

The chart on the following page is the weekly Deutsche Mark data from
the July 1991 low. The three pivots on the weekly chart are defined by the
initial low (July 1991) followed by the initial high (Sept. 1992) and the
first reaction low (Feb. 1994). The Median Line extends from the July
1991 low and bisects the vector line from the Sept. 1992 high to Feb. 1994
low. Two parallel lines to the median line are drawn from the second two
pivots.
Page 1
Dynamic Trader Software Example - Aug. 1997
ML: Median Line

MLP: Median Line Parallel
Over a year after the channel was initially constructed, the mark made
a major high in April 1995 dead-on the Median Line. The mark then made
an intermediate term low when it reached the lower Median Line Parallel
in early 1996. The break below the channel signals the major trend in the
mark is bearish. A new bearish channel should now be drawn using the
Sept. 1992 high, Feb. 1994 low and April 1995 high.
The chart on the next page includes the new Andrews Channel. The
third pivot used to form the channel is the April 1995 high shown in the
chart above. The Oct. 1995 high was made at the upper Median Line
Parallel followed by persistent bear trend through July 1997.
Page 2
This Andrews Channel provides a very important signal of the long

term position of the DM. The sharp decline below the Median Line in July
1997 signals a high probability that the DM will continue the bear trend
and eventually reach the lower Median Line Parallel (support channel line)
without advancing above the upper Median Line Parallel (resistance
channel line). While this leaves a lot of room for an intermediate-term
corrective advance, the long term trend should continue to be bearish for
many months, maybe years!
The price retracements shown on the chart above are from the April
1995 high to July 1997 low. They are included for reference to a potential
rally. In the weeks ahead, the upper Andrews resistance line falls in the
38.2%-50% retracement zone. If a rally is made as anticipated, be alert to
the potential of the coincidence of the Andrews channel line and
retracement targets. If the mark continues to make new lows, the
retracements will be adjusted.
Andrews Channels and Lines not only provide high probability support
and resistance zones, but indications of the major trend position and trend
continuation signals.
Page 3
The chart below is DM cash data. Currency traders must always

perform all analysis on cash data as well as futures data for a complete
view of the position of a currency market.
Note below how the DM cash tested the lower Median Line Parallel
five times before accelerating the advance to recently closing above the
Median Line.
Fib Median Channel

Version 2 of the Dynamic Trader Software due out in Oct. 1997 will
include several unique features exclusive to the Dynamic Trader software
that build upon the geometric projections of Andrews Lines.
The Fib Median Channel divides the Andrews Channel by 38.2% and
61.8% and provides a relatively narrow inner channel where support and
resistance are often found. The next two charts are from a beta version of
Dynamic Trader (V.2). They include the Fib Median Channel
Page 4
Below is a recent daily chart of T-bonds. An Andrews Channel with

the Fib Median Channel is begun from the April 11 swing low. Note how
all of the highs were made just above the Median Line at the Fib Median
Channel resistance. Traders will find the Andrews Channel with Fib
Median Channel important targets for support and resistance.
The chart on the next page is a continuation of the bond data with the
Andrews Channel and Fib Median Channel begun from the swing low on
May 27. The Fib Median Channel was the minor support zone throughout
the rally into the July 31 high which tagged the upper Andrews Channel
Line.
Page 5
If bonds make a confirmed decline below the Andrews support channel

line, it will be an important signal that the bull trend from the April low is
complete. If this should unfold, a new channel will be constructed
following the completion of the first swing low and counter swing high.
The new channel will provide high probability support and resistance
zones.
Regression Channels and Andrews Channels

Andrews Channels are often in the same position as regression channels
once a trend is mature. Why are Andrews Channels far superior? Andrews
channels are constructed in the initial stages of a trend once the first three
pivots are complete while regression channels are constructed well after
the trend is mature. Compare the two on many charts and you will find
Andrews Channels with the Fib Median Channel far superior and more
practical to the trader than regression channels.
The Andrews Channel routines in Dynamic Trader (V.2) also include

Sliding Parallel, Warning Lines and the 50%-Offset Channel. In a
continuing effort to provide traders with the most comprehensive analysis
Page 6
tools, Dynamic Trader provides the most comprehensive Andrews

Channel routines of any technical analysis program.
Dynamic Traders Group, Inc.

6336 N. Oracle Suite 326-346
Tucson, AZ. 85704
(V) 520-797-3668
(Fax) 520-797-2045
(E-mail) dt@dynamictraders.com
(Web) www.dynamictraders.com
Page 7

DT Andrew Channel

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Dynamic Trader Software Example - Aug.

Dynamic Trader and Andrews Channels

DM: Weekly Data

ML: Median Line

This Andrews Channel provides a very important signal of the long

The chart below is DM cash data. Currency traders must always

Fib Median Channel

Below is a recent daily chart of T-bonds. An Andrews Channel with

If bonds make a confirmed decline below the Andrews support channel

Regression Channels and Andrews Channels

The Andrews Channel routines in Dynamic Trader (V.2) also include

tools, Dynamic Trader provides the most comprehensive Andrews

Dynamic Traders Group, Inc.

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