Trend Analysis
In Figure 5.24, we see Gold with a consistent trend rate of approximately
$3.30 per day. Notice that once the trend rate changes, the behavior of the market
also switches to a new regime, displaying greater volatility and larger swings in
price. Again, the new trend rate of $10.30 may be unsustainable over the longer
term. Gold prices in fact declined rapidly thereafter (not shown on the chart).- Barrier Proximity: There is always a high probability that a trend may reverse
as it approaches a strong and significant price barrier. In Figure 5.25, we ob-
serve the price for iShares MSCI Emerging Markets Fund rebounding after
testing a strong and significant support level. We also notice the cycle‐tuned
stochastic indicating an oversold condition at the point of reversal.
figure 5.23 Diminishing Angular Momentum Is an Indication of Potential Weakening
of a Trend.figure 5.24 Oversold Barrier Proximity Leading to a Reversal on the Daily Chart of
iShares MSCI Emerging Markets.
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