Monday, November 7, 2011
Three push legs
Three pushes with small pullbacks between them as in b8,15,18 or b57,60,69 may act like a poor Wedge. This wedge will basically act as a single leg and is likely to give a pullback and then resume the original move, taking out the prior leg extreme.
For example, the three push leg down to b18 gave another leg down to b24 before giving a two legged move to ema, as did the leg up to b69.
A three push leg to ema or other barrier may give rise to a deep pullback or even reversal, especially at the beginning of the day. On the other hand a three push leg in the direction of the ema slope may give a pullback thats stopped at the ema as it did today.
Trading such a leg is simple. If the leg stopped at a barrier, take the reversal if the signal is decent. If not, wait for a pullback and continuation for at least another leg.