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A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits by Michael C. Thomsett

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Consolidation Plateaus

The tendency for consolidation is to act as either a pause between longer-term primary or secondary trends or to replace one primary trend with another. A consolidation primary trend is an idea often not appreciated by analysts and investors. Traditional thinking is that trends move either up or down, and sideways movement is not a trend but a period of indecision. There is some truth in this belief, but it does not fully describe the nature of consolidation.

Dynamic trends often move in stages, pausing periodically while investors decide whether to take profits or cut losses. Pauses can also be caused by earnings to be announced in the near future, but accompanied by concerns that a surprise might arrive as well. At such ...

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