When Time is Up, Markets Reverse
Price, Volume and Time are the main aspect of trading in the market, out of them time has been ignored by the traders. Because time can be easily predictable rather than price and volume. The use of time indicators or time cycles would reduce the number of potentially false price signals.
Market timing is a terrible thing, unless you tune it right. Timing is a vital ingredient to successful trading and traders can still achieve profitability even if they are poor timers. When the rally begins on either side, say bullish, cycle of short term bullish pattern for shorter period last for 5 to 7 days and for mid-time period 2 to 3 months and long term could be 1 to 3 years. Important things is how you want to manage your trade with the market.
When the market turns to bullish, There would be some buyer already in the market. In next turn, short seller will rush to square-off their short positions and new buyer will force the market more ahead to bullish. The price may be stopped moving further due to profit booking of short term buyer, they will temp to take benefit of rise and make the market steady or it can move more further after stability with new aggressive buyers and market can reach to high. Where, there are lots of probability of new sellers upcoming. With new high prices and traders booking their profit and short-seller coming back in the market again, the market begin to go down or stay steady if there is still consistent buying.
How to decide the market has hit top or bottom? Finally, using even a simple technical indicator such as stochastic /RSI can make fundamental strategies much more efficient by improving trade entries. Some of the greatest traders in the world have proven that one does not need to be a great timer to make money in the markets, but by using the techniques discussed above, the chances of success improve dramatically.
For more detail click below,
Stochastic – can be useful to spot timely entry point, which offer attractive risk-reward set-up
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