| What Just Turned That Market? |
| Written by Don Dawson |
| Monday, 06 April 2009 00:00 |
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As far back as my early days of plotting price charts on graph paper, this particular pattern has always kept my attention. These patterns could be found at market tops and bottoms. The problem was I also found a fair amount of them in the middle of the tops and bottoms, too. Over the years I noticed people started putting several of these patterns together to help identify the bigger picture and larger trend changes. There are two patterns I will show you that make up this reversal pattern. I will show you how to identify this pattern, some possible entry techniques and possible stop placements. Notice that I said “possible” on the entry and exit techniques. As I have said in the past, we are all individual traders and must find something that fits our own style and comfort of trading. There is no Holy Grail or one strategy that works for everyone. So, take a look at this and see if you can incorporate it into your trading plan.The first pattern is one you will find at market tops. It takes 3 bars (minutes, daily, weekly, monthly) to complete this pattern. You are looking for a situation where supply exceeds demand at the market top. You will see in the chart that bar B made a new high over bar A but bar C made a lower high. The formula looks like this – B High > A & C High. Since bar C could not make a new high, this is where supply came into the market for the moment. This is an excerpt from May 2009 issue of Trader's Journal.
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