Monday, February 27, 2012
Breaks of Steep trends
When a trend is very steep such as the move from b5 to b23, the entire move acts like one leg and often act like a spike and channel with the channel acting like a second leg to the spike. Typically, most of the momentum is exhausted at the spike, causing the channel to be comparatively shallow in slope.
Since the channel is a W, you should expect 3 higher pushes and then a test of the channel start (b35 low) which could occur in the next day.
Since the channel is a weak trend, if its wide enough to trade, you can still take A2 and other deep 2 legged pullbacks until the third push is complete.