22. How to Know if You Are Wrong
Invalidating a Trendline
As covered in Chapter 8, “See the Forest and the Trees,” prices can briefly penetrate the boundaries of technical patterns without invalidating them. Usually when this happens, prices snap back within a period or two. Volume and momentum studies can help determine whether the violation was significant or not. It still depends on how strong the pattern or trendline was and how much power the market had when it broke through. If either the pattern or the breakout were weak, it may become necessary to adjust the trendline or boundary to include the new data.
Changing a Line
The more a trendline is touched by prices, the stronger it becomes and the more significant a breakthrough ...
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