Wednesday, February 6, 2013

Trend acceleration

Trends normally go flatter with time but sometimes (often due to news) the trend can actually accelerate. This is observed by the price making steeper and steeper trendlines. Such an acceleration eventually pauses and can reverse the entire move or go into an extended pullback as on this day.

An accelerated trend is usually a hard trend and you can buy shallow pullbacks and one legged pullbacks. Note that you should have very large moves with-trend and very shallow moves counter-trend for something to be a hard trend. The moment shallow pullbacks stop working or you see a deep pullback, the hard trend is likely over.

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