What are the 2 yellow horizontal lines to the right of a short-term chart?
They identify a ‘decision day’, which is a day to put on the trade. In the short term we use 2 orders: a buy stop and a sell-short stop. These orders are designed to put you in a trade in the correct direction a stock is moving. You are buying on a move up or selling short on a move down. The 2 lines represent the levels of these 2 orders and the values are shown in the table on the right. We call them “hash” lines. Why are the yellow hash marks sometimes colored half blue or purple? The color indicates if there is a higher probability one direction or another. Blue indicates 75% probability the price will move in direction of the color. For example, if the upper line is half blue then there is a 75% probability the price will move up. If the lower line is half blue then there is a 75% probability it will move down. Purple indicates a 90% probability. Tests have shown that the indicators are right over 80% of the time, but it has no bearing on the trade. You enter both orders according
