Bonds, Price Momentum and Trends by Alex Saitta
A market trends, and then consolidates, before either resuming the trend or reversing. Is there any way that a technical trader can get a hint about which outcome, the reversal or the continuation, is more likely? This market analyst offers his method for finding out.
One of the first guidelines technical traders learn is The trend is your friend. Then you begin to realize the trend is your friend — until it reverses. At that point, it becomes someone else’s friend and your enemy. So, soon thereafter you find yourself asking, Are there signs
that occur before a price trend ends? After all, knowing what usually takes place before a trend ends could be of utmost importance to the trend-follower.
Armed with this knowledge, the trend-follower could conceivably determine whether a countertrend move is a correction or not, and make the appropriate decision.