the hAnDbook of teChnICAL AnALySIS- Frequency and Depth of Trend-Based Oscillations: An uptrend is considered
to be more reliable if it displays a reasonable number of oscillations. Oscilla-
tions should be fairly frequent and not too shallow or too deep. Such a trend is
indicative of healthy profit‐taking activity. With some profit taken off the table
as the trend unfolds, traders and investors tend not to react as emotionally and
irrationally at higher prices where the risk of losing pent‐up and unrealized
profit is greater. In Figure 5.26, the uptrend illustrated on the right‐hand side
displays relatively little profit‐taking activity. With a relatively larger amount
figure 5.25 Oversold Barrier Proximity Leading to a Reversal on the Daily Chart of
iShares MSCI Emerging Markets.
Courtesy of Stockcharts.com
figure 5.26 Frequency and Depth of Trend‐Based Oscillations Impacting on the
Persistence of Existing Trends.