DislikedHi Don, Thanks for replying/commenting. Here is my view about selling exhaustion which causing the the decent up movement. Not sure if it correct, please comment {image} i had yet to detect the buying exhaustion on the decent move, please enlighten me if you found already about the buying exhaustion. thanksIgnored
- Note how prior to this point, when price leveled off (most likely because the session ended) and selling resumed there was large selling follow-through as more and more sellers jumped on the "short train". But at the bottom (and this is what consistently marks a bottom), even though price went through the bottom with good volume...it then had no follow through and just pooped out. Nothing left for price to do but rise and try to attract more sellers.
- Rising prices do attract more selling and price reacts back to the lows...met with vigorous buying. Of more significance is that the buying pushed through the previous selling level and closed....then...
- Each time price moved back into that area buying quickly pushed price higher.
While its easy to say (1) price formed a double bottom with a (2) bullish engulfing bar and (3) previous resistance is now support. And all of that is true from a technical standpoint. Understanding WHY makes a huge difference and one (you) could have anticipated each of these areas by simply observing how price is reacting. Thus you could place an order VERY near the extreme low price, and be filled with your stop safely outside that zone. As well, add into your position each time price retests the buying area (or at least move your stop higher to lock in profit once price has moved away and made a new high.
Learning to "see" the order flow and anticipate price behavior allows you to enter with a very small exposure to risk, then manage your trade either adding in or locking in profits as the price continues to move your direction. Finally by now "switching modes" you can exit that trade at the best price possible, when you see the buying exhaust and order flow start to wind down from the buying exuberance. Just as it did with the selling. This will repeat over and over again, forming swing tops and swing bottoms, for you to take advantage of.
With practice you can find any market, and trade a swing from one point to another and know you have maximized your potential for that move.