the hAnDbook of teChnICAL AnALySISa minor correction at point 3, which represents potential resistance from an
overbought angular perspective. Note that a bearish rising channel is seen
developing above trendline 2, helping to strengthen the case that a minor cor-
rection is highly probable. In fact, 3M Co. went on to rise above $140 after
correcting at point 3 (not shown on the charts).
In Figure 5.22, an upside acceleration in price is bullish whereas an upside
deceleration in price is bearish. Similarly, a downside acceleration in price
is bearish whereas a downside deceleration in price is bullish. Upside and
downside acceleration is normally parabolic in nature. It should be noted that
although an upside acceleration in price is bullish, the uptrend may not be
self‐sustaining if the rate of ascent was excessive. Such rapid increases in price
usually end in a blow-off or buying climax with prices subsequently collaps-
ing. Similarly, downside acceleration in prices may also end in a selling climax.
The price action depicted in Figure 5.23 shows an even more potentially
bearish scenario in an uptrend. Here we have both a deceleration in price as
well as a diminishing bar range.figure 5.21 Preservation of Angular Momentum on the Hourly Chart of 3M Co.
Courtesy of Stockcharts.com
figure 5.22 Acceleration and Deceleration in Trend Momentum and the Associated
Sentiment.