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But don't whizz your britches just yet. In early August when the channel line was first breached, I warned that bulls needed to extend the wave upward in order to allow sufficient room for a retracement without violating the line. That's exactly what happened.
Now bears are in a similar situation. They need to extend the current wave downward and build in some margin to allow for a retracement without letting bulls back into the channel. They do not need to mess around here. Kick them mercilessly while they're down -- or get ready for a nasty fight if you let 'em back up.
How powerful can one line be? This guy knows - that's why he's more gangsta than you.
Of course, there was that messy bull/bear tug of war back and forth over the channel line about a year ago. That was before I was born, er I mean, that was before I started trading. How did you trade that?
ReplyDeletehttp://screencast.com/t/l6O2NILsiF
That chopfest was a fourth wave triangle (at least on the indexes) and it's not uncommon to see triangles form around important lines. When this happens, it's actually a type of "disrespectful respect" in my view. The market seems to acknowledge the line's importance by staging a big messy battle for control of the line.
ReplyDeleteI responded here as well with more info:
http://evilspeculator.com/?p=12315#comment-21397426