Monday, August 8, 2011

Bear rallies

Often the strongest bullish moves occur as failed breakouts in strong bears. Moves such as b1-2, b14-21 and b60-70 look very strong but end up as failed breakouts.

b2 failed as a 1 bar bull move, b21 failed as an A2 and b71 failed as a gap bar. On a very wide range day such as this, its possible to swing a good distance even counter to the main trend. However, a swing with the main trend would have obviously fared much better.

When in a strong bear always watch out for a failed breakout. You an minimize your counter-trend position exposure by taking only 2 legged pullbacks. For example, b67 would be a 2 legged pullback after a possible reversal.

1 comment:

  1. Thanks for the reminder on the 2 legged pullbacks as prime low risk trades.