What Is An Overextension In The SIMPLEST Terms?

NYSE:PNC   PNC Financial Services Group, Inc. (The)
A lot of times we get away from simply keeping it simple. When it comes to trading, simplicity will be your best friend. I consider Price Action the "OG" of all technical analysis .

On the same note, I don't knock anyone who uses indicators to make a profit. I do have a few myself that I originally started with, that I still plug in from time to time.

I will ALWAYS keep the Volume indicator on my chart, it's the most important indicator there is to use. Because price may tell you when & where it's happening, but volume will tell you how it's happening. Is there commitment basically.

The other indicators are: VWAP , 21MA, 200MA (I also plug in Camarilla Pivot Points set to "Traditional" using the Pivot with R1-R4/S1-S4 levels only, if price has entered into a voided area).

I use Pivot Points in voided areas to shortcut the calculation & measurement of the potential move & set R1(resistance) for my 1st target on a breakout & I use S1(support) for my 1st target on a breakdown. With the PIVOT (P) level being where price may react either way.

But here with #PNC, I'm highlighting the breakout that happened. The point in this chart is to show an overextension within price itself. The technique is rather simple and quite frankly elementary but effective & that's just to count the bars.

When you begin to see price pushing 3,4,5,6,7,8,9 bars up or down!!! THAT IS NOT A TIME TO GET IN THE TRADE!!...IF YOU ARE IN THE TRADE, REAAALLLLYYY THINK ABOUT TAKING PROFIT SOONER OR SOONER!!
Novice traders sometimes have the misconception that when they see a multitude of green candles pushing up or a multitude of red candles pushing down, that NOW is the time to get in & it's not. You're asking for nothing but small profit, tough managed trades, reversals, anxiety, emotional & financial pain. The people who are already in those trades are the ones making money & taking profit, YOU are the one that needs to sit on your hands, but you choose greed sometimes. Trading is about probabilities, high probabilities and low probabilities. You have a higher probability of price stalling out or reversing on you after 6 or 7 bars up or down vs. A higher probability of the trade pushing ANOTHER 4, 5 or 6 bars up or down.

In closing, just play the higher probability no matter the timeframe.


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