DID WE HIT BOTTOM? * ARE WE IN A REVERSAL? * WHEN CAN WE START BUYING? * WHAT SHOULD WE BE LOOKING FOR? I get to field a lot of these questions lately, and with good reason, considering the present market environment where the major trend is ambiguous and the shorter trends are all over the charts. It just shows there are a lot of thinking heads out there seeking answers before committing a position, and I admire them because they are asking the right questions. To those who practice technical analysis, the answers may look fairly obvious and straightforward. But just the same, I put together a few diagrams that ought to show how technicians customarily visualize a changing downtrend. They are illustrated in a general and overly simplistic manner but I find them extremely helpful nonetheless. The real deal comes with a lot of chart noise and clutter. As a stock trader using technical analysis, i would like to see any one of reversal patterns A, B, and C.1 appear before I start participating. And although I wouldn't be buying into consolidation pattern C, I would absolutely welcome seeing one unfold as it is a sign of a potential bottoming that could precede a subsequent reversal such as C.1.
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