Tuesday, September 16, 2008

 
The Lowdown on Bottoms

Bottoms print as a result of market physics. Uptrends and downtrends exhibit natural wave motion as they thrust forward, and they pull back to test gains or losses. This action-reaction becomes very important at market turning points. It implies that a reversal pattern will appear at some point in each trend. In an uptrend, a lower high will eventually follow a higher high and mark a new top. In a downtrend, lower lows will finally stop when price action prints a higher low. This marks the birth of a bottom.

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