Trader's Toolbox: Bottoming Behavior Revisited...

Trader's Toolbox

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Bottoming Behavior

"Markets which have been in a persistent downtrend often exhibit a common pattern as the end of the decline is approached. The pattern is to post a sharp rally followed by one final decline to new lows.

Let's use this example of sharp, past rallies that were formed in both pork bellies and gold. Following the rallies, both markets plummeted to new lows. However, once new lows were made, the declines stalled. The failure to sustain the break on the move to new lows indicated the selling was effectively exhausted and potential bottoms had formed. A similar pattern marked the low in soybeans prior to the 1983 bull market..."

Revisit the Trader's Toolbox Post: "Bottoming Behavior" here.

Poll: And the hits just keep on coming!

Between natural disasters, shutdowns, and rallies, there is no argument that we are facing some MAJOR volatility in the markets right now. Of course, most of us would like to keep our emotions out of our trading, but lately that seems impossible.

How successful have you been with keeping your emotions out of your trading (in the last month)?

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We value your opinion and would love to hear how you are coping with the current volatility, so be sure to share in our comments section.

The MarketClub Team