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Market Turning Points - Price Action


Market turn, why? There are certain price patterns that can substantially help us determine market reversals. Observing these potential reversal points in conjunction with the Cycle Turning Points and the Support/Resistance Tables found in the Overnight Update can substantially increase our profitability. Some of these price actions indicating reversals are:

A doji at an intermediate high or low associated with a sharp rise in volume. (See Candlestick Patterns - an Overview for further information on Doji)

A one, two, or three tick new high or new low.

A sharp rise in volume.

A penetration of a Bollinger Band.

A quick market move up or down with little or no follow through.

I strongly suggest that all traders consider the above factors prior to trade entry.

Additionally, statistics suggest that there are two periods during the day in which the occurrence of trends is most likely. These trending periods are 8:30 to 10:30 and 12:00 to 3:15 CST.

Also, be very aware that the market is fueled by volume. The market seeks out price levels where volume is greatest; i.e. where the stops are located. Where are the stops located? At the intraday highs and lows.

By Charles Holt,
Daytrader's Bulletin
Real-time Trade Signals for S&P 500 & Nasdaq 100

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