cotton

Protecting profits is a key part of trading. Once in a trade, how do you
tell when a move might be ending?  One way is to look at the ranges of
the bars as the move progresses. The three arrows in the chart show
three tops. Looking at the second arrow, we see a 4 white bar up
move. The last two white bars are the key to a possible top. The 3rd
white bar up has a range from high to low of 2.06. It has a candle body
from open to close of 1.34. The fourth bar in the move has a range of
only 1.85 and a body of only 1.06. Both are narrower than the previous
bar. This signals that the bulls are running out of buying power. This signals that it is time to get out of any long positions or at the very
least, move stop losses in tight. Similar patterns play out in the other two arrows.

Lundy S. Hill

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