Friday, April 24, 2009

Anatomy of a Breakout

The following explains reflexivity in the short term.

"Any high volume with wide spreads up shows that the professional money was
prepared to absorb any selling from those locked-in traders who did decide to sell. This
is known as absorption volume.
The market makers anticipate higher prices and are bullish. They know that a breakout
above an old trading area will create new buying. Those traders who have shorted the
market will be forced to cover their poor positions by buying. Traders looking for
breakouts will buy. All those traders not in the market may feel they are missing out and
will be encouraged to start buying. This all adds to the professional bullish positions.
Note any testing or down bars on low volume after this event is a very strong buy signal."

pg. 30 Williams - Undeclared Stockmarket Secrets