Partial recovery is generally to be expected following the completion of a broadening pattern. In most cases, a rally will develop shortly after the level of the fourth reversal has been broken. This rally seldom gets beyond the half-way level between the last top and the last bottom of the pattern.
When it works, this rare pattern is exceedingly important, and generally marks a critical turn from bull to bear market.
When it comes to taking a short position, the conservative policy is to wait for the rally and to sell when prices have recovered about 40% of the decline which completed the broadening top.
When it works, this rare pattern is exceedingly important, and generally marks a critical turn from bull to bear market.
When it comes to taking a short position, the conservative policy is to wait for the rally and to sell when prices have recovered about 40% of the decline which completed the broadening top.