Trend Analysis
■ (^) Failed Breakout Entries: An entry may be initiated in the opposite direction
after a failed breakout, which may or may not be in the direction of the pre-
dominant trend.
■ (^) Random Entries: An entry may also be initiated in a random fashion.
■ (^) Pattern /Sequence‐Based Entries: Entries that are initiated after a particular
sequence of bars have unfolded (algorithmic) or after a pattern is completed,
for example, DeMark Sequential and Japanese candlestick entries.
general scenarios for Market tops and bottoms
As we learned in Chapter 4, there are basically three variations of a market top
and bottom. See Figure 5.33. Examples of a more complex top or bottom would
be a head and shoulders formation, a broadening formation, an island, a diamond
formation and a rounding top or bottom.
swing points and barrier strength
An inflection point such as a peak that is flanked by a larger number of bars
on either side of the bar with the highest price is generally regarded as a more
significant peak. As such, the resistance level associated with such a peak will be
regarded as a significant and strong barrier to price. The resistance and support
levels associated with peaks and troughs that are flanked by a smaller number of
figure 5.33 Variations of Market Top and Bottom Reversals.