Tuesday, July 20, 2010

Cycles of expansion and contraction

Narrow ranges are patterns for profit. Liquid markets will usually not stay inside a narrow range for long. Therefore, when the Technician detects a narrow range pattern, she waits patiently for a breakout from this range. The direction of breakout is usually unknown. There is a general rule that consolidation will lead to a resumption of the trend, but this rule does not work at times of trend reversal. Hence, the direction of breakout is unknown.

For past seven days, the Nifty has been inside a trading zone. Quite narrow. We shoulde xpect a move out of this zone, soon enough. Have a look at the chart.

2 comments:

gourv said...

Hello Sir,
Gourav here.Is there any specific reason you adress the tarders as she instead of he.While reading i fell bit unusual.

Regards
Gourav

Jazz said...

Thnks sir, its a NR7 setup as discussed by Linda Raschke in her book street smarts. As per her, today can be the breakout/breakdown day