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First, We'll count the swings. Two swings, consisting of four legs, always constitute congestion. They look like this: AA or W. I marked them on the chart. In this case, there were three swings during the congestion.

Here's another wonderful way to know when a market is in congestion. It utilizes the concept of a series of reversal bars, a series of dojis or a combination of both.

Take a close look at the boxed-off congestion area on this page.

Notice the alternation of "open high-close low", "open low-close high" bars during the congestion period. Intermixed, but more often near either extreme of the congestion area, are dojis. The alternation of bars within a narrow range from top to bottom are a sure sign of congestion.

Equally as important as knowing when prices are in congestion, is knowing when they are about to break out of congestion and begin trending.

Anyone can look back and see that a market has trended, or is now in a trend. But it's a lot harder to spot when prices are going to start trending.

We've already seen how the beginning of a trend can be surmised by respectively buying or selling the breakout of the extreme of a third successive higher high, or a third successive lower low. That was a simple counting method. However, a close look at the chart on this page will quickly reveal that within the boxed area, no such opportunity occurred.

How then can it be known that prices might be about to break out?

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