Canara bank example....
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We will note the Low and HIGH of each day and ‘anticipate’ the Low of that day to be Point 3.

21st July (first LOW day after 19 Jul 2010), the stock’s High and Low prices were 495 and 484.10. We anticipate 484.10 to be Point 3. This will get confirmed only once we see first HIGH day. However, we will not wait for the confirmation but prepare our trading plan on ‘anticipation’. Hence, our entry price would be 495.05 for 22nd July. However, on 22nd July, this stock did not cross 495 (High of previous day). So we did not enter the trade.

High and Low of 22nd July were Rs. 491.5 and 476.10. Now our new ‘anticipated’ Point 3 is 476.10. We draw our trading plan based on this. Entry price – 491.55, Stop Loss – 476.05 and Target is 575.10 (476.10 + 99).

On 23rd July, again the stock did not cross 491.50 and the High of the day was Rs. 490.55. In our trading plan, only Entry price would change to 490.60 and nothing else will change since this stock did not make any further Low. The Low of 23rd July was 481.70 which is higher than the Low of 22 July i.e. 476.10. So, our Point 3 will still be at 476.10 ‘unless’ we see a price lower than this on 26th July.

On 26th July, it hasn’t crossed 490.55 yet. On the lower side, it has made a new low at 473.50. So, we will not enter the trade today either. We will re-visit the trading plan after the close of the day today and draw up a new trading plan based on the High and Low of today i.e. 26th July 2010.