THE HAnDbook of TEcHnIcAl AnAlysIsfIgure 2.10 Bearish Flattening Type Action on Apple Inc.
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of the existing primary trend. It usually lasts from weeks to approximately three
months, and frequently slightly longer. It is sometimes referred to as the waves on
the tides. The secondary reaction usually retraces from one‐ to two‐thirds of the
primary trend’s range. Any retracement or correction beyond two‐thirds on high
volume usually signifies that the secondary reaction may in fact be a new primary
bear market. It is important to note that Dow Theory also stresses the importance
and psychological significance of the 50 percent retracement level, a view shared
by another prominent technician, W. D. Gann.
A primary bull trend resumes its uptrend once price breaches the highest peak
formed by the secondary reaction, while a primary bear trend resumes its down-
trend once price breaches the lowest trough formed by the secondary reaction.
fIgure 2.11 Non Flattening Type Action on Apple Inc.
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