Guppy Count Back Line

The Guppy Count Back Line (CBL) is a support/resistance line, calculated using end of day data. It has applications in trading in both entry and exiting a trade. The CBL is not to be used as a standalone tool and should be used in conjunction of other tool like GMMA or a simple trend line.

Applications of the CBL include
• an indication of the potential end of a downtrend
• an entry trigger
• a protect capital stop loss trigger
• a protect profit exit trigger
• a guide point for setting a maximum chase price

The CBL is calculated using the cumulative range value of three higher days. This means the calculation point for the CBL line might be 5, 10, 15, 30 days away from today’s date.

The Value of the CBL only changes when a new higher high is made and only then if the stop price rises. When using the CBL as a stop, we never lower it.

Calculation of the CBL is as follows
1. Use latest peak high as start point
2. Ignore higher lows as you count back
3. Draw CBL stop loss line @ 3 lows down
4. Include low of start point and gaps
5. Move up CBL as share reaches higher peaks
6. If 2 peaks at same price, use the one that gives highest CBL
7. Exit day after closes below 3 day CBL
8. Beware of selling near trend line support
9. But definite exit confirmation if closes below trend line and 3 day CBL


Below is an example of AFI.AX and the calculation of the CBL throughout the current trend.