SPY Chart, V and Extended V

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Trading a V bottom is difficult because calling the turn at the bottom of the V is tough to do correctly. You can use a down trendline (drawn along the descending price tops leading to the V bottom) pierce as the buy signal but it's best to wait 2 or 3 days for price to confirm the tend change. You can also check the mirror angle. Often price will rise in an angle similar to the descent. If that appears to be the case, then buy.


Example of an extended V bottom chart pattern. The decline into the pattern is unusually steep, meaning it cannot last long, and it doesn't. Price rebounds in a V-shape and then levels out, forming the extension. The extension appears on the chart as a descending triangle -- a flat base with down-sloping top. The breakout from this congestion pattern is upward and that means a powerful move up, retracing much of the drop leading into the V bottom.

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