“Don’t panic, buy the dip, who cares?” or “These are rumblings of an earthqu...
Plunge or Just a Pull Back—How Do You Know? (Part 4 of 5)
08/21/2008 12:00 am EST
Price congests a bit and then heads higher, again making a new high for the move. The change in behavior was there for all of us to see if we were looking.
I’ll remind you again: This is ONE potential price scenario. Let’s see another. Can you tell which is real and which was just a potential price scenario?
Just as important, see if you can see the change in behavior in this next scenario before you I point it out.
Price isn’t looking as bullish in this scenario. It’s cascading lower and had no trouble trading below the 38.2 percent retracement. Once it re-stored its energy, it spiked lower, easily breaking the 50 percent retracement area and trading right to the 61.8 percent retracement area before forming another Energy Coil.
Do you see a change in behavior? Plunge? Pullback?
I may have tricked you on this scenario! I think there are two changes of behavior, although it’s the second one that really sets the tone for the probable path in price.
The first change in behavior comes in the form of higher lows and the failure of price to retest its low at the 61.8 percent retracement area. But that’s not enough to go on.
The second change of behavior, once again, is the break above the top of the Energy Coil.
But we have two nice cascades lower here and quite a nice pullback in price. Do you think you know the probable path of price going forward?
Once again, the change in behavior gave us all we needed to know IF we paid attention and saw it. Price had no trouble climbing back higher. Will it make it above the down sloping Upper Median Line or is that an area to look for a high probability short entry? From this point forward, do you think price is going to plunge or keep trading higher?
Have you decided which scenario really happened? Not sure yet? Let me throw you one last curve!
More tomorrow in Part 5
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