Correction or Reversal? by Alex Saitta
ARTICLE SYNOPSIS ...Markets trend. And within those trends are corrective phases,
which in turn are followed by the trend resuming. At some
point, the major market trend reverses. So what might be a
clue to whether the current price action is a correction or a
trend reversal? Here's one method to consider.
After a market advance and the
price drops below its moving
average, technicians are faced
with a question: Is the decline
just a correction, or is it the beginning
of a trend reversal? If,
after the moving average cross,
the technician decides it is indeed
a correction (Figure 1), he'll
prepare to buy support...