Are You Immoral For Trading Stocks? Enter your email address and forex trading plan pdf’ll send you a free PDF of this post. Buy the first pullback after a new high. Sell the first rally after a new low.
Afternoon strength or weakness should have follow through the next day. The best trading reversals occur in the morning, not the afternoon. The larger the market gaps, the greater the odds of continuation and a trend. The way the market trades around the previous day’s high or low is a good indicator of the market’s technical strength or weakness. Look for the market to either test and reverse off these points, or push through and show signs of continuation. The last hour often tells the truth about how strong a trend truly is.
As long as a market is having consecutive strong closes, look for up-trend to continue. The up trend is most likely to end when there is a morning rally first, followed by a weak close. High volume on the close implies continuation the next morning in the direction of the last half-hour. In a strongly trending market, look for resumption of the trend in the last hour. The first hour’s range establishes the framework for the rest of the trading day. A greater percentage of the day’s range occurs in the first hour then was the case in the past, and thus it has become increasingly important to trade aggressively if there are early signs of a strong trend for the day. There are four basic principles of price behavior which have held up over time.