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Figure 13.8
Results of the Wedge Sell
Copyright 2000, TradeCast® Ltd. |
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The smart buy is a reversal play. In this case, the stock has been falling. You are looking for a setup that tells you that this stock will reverse back to the upside as seen on Figure 13.9. |
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The criteria for the smart buy setup are: |
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For at least the previous three trading days, you see consecutive lower highs and lower lows (see 1, 2, 3 on the figure). |
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For at least the previous three trading days, the closing price each day is below or equal to the opening price (you can see that very easily by just looking for black bars). |
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On the last trading day, you would like to see higher than average volume (see 4 on figure). |
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What is the market psychology behind this setup? |
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First, you want to see that the sellers have been firmly in command. For at least three days they have driven the stock down each day. After |
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