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Crowd Money: A Practical Guide to Macro Behavioural Technical Analysis by Eoin Treacy

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Chapter 15: Trend Ending #2 – The Massive Reaction Against the Prevailing Trend

“Broadening is seldom a reliable continuation pattern.”

– David Fuller

What we will cover in this chapter

  • Failed breaks and loss of momentum are clues that the imbalance of supply and demand is changing. However, a massive reaction against the prevailing trend is categorical evidence that something big has happened. The size of the counter-trend move is such that it forces investors to reassess. In this case reassessment means reversal.
  • The proverbial bolt from the blue can happen so fast that it takes time for the crowd to catch on, so type-2 endings are often followed by a period of ranging or ‘right-hand extension’ as the impact of the price action is ...

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