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TFC Commodity Trading Forum

Re: Sept Nat Gas/Critical Point/Randolf

Hi Randolf. Yes I came across that techncial statistic years ago and was surprised. I had read about the 4 stages of a market which said Stage #1 was the base building phase after a bear market and was choppy sideways price action for some time. And to wait for Stage #2 breakout for the bull trend to buy rather than tie up your money in a sideways base building Phase #1 period. That made sense and you can see that on most charts. And then the Stage #3 was the topping phase which sees price also chop sideways much like the base building Phase #1 but at a high price area that just doesn't continue the uptrend of Phase #2 and is erratic with high volume whipsaws that can also last a long time going nowhere as smart money is getting out and dumb money getting in on the 'obvious' run up. And then Phase #4 is the bear market with prices plunging and zig zagging down until exhausted and washed out. Then Phase #1 begins again. But in the Phase #4 bear market prices become low historically after a sharp selloff on the way down and look dirt cheap and reach plateaus and trade sideways for periods of time as prices have reached oversold status and are just pausing as short covering is occurring and early birds are buying what they think is cheap and there is little fear of further selling with prices so low and temporarily stable. But odds are this is just a typical pause in a downtrend. Once price sells off sharply again and breaks recent support levels the selling resumes as holders are shocked that this is not a base building phase after all. They do look the same as prices did selloff and then track sideways for awhile. This is one reason to wait for a confirmation price has completed the base building phase and is starting a Phase #2 bull trend again. Plus not tying your money up in a sideways choppy market meanwhile and risking a breakdown within a bear market that will cause a washout in price to new lows. You'll see this with most everything as most markets go through each stage. The Stage #4 bear market is very deceptive and also has strong bounces and spends time plateauing as well, lulling traders into thinking a bottom is in and 'safe' to buy in again as no new lows may have been seen for some time. Hard to tell them apart. Always best to wait for 'proof of the pudding' before committing. Even shorter term a sideways channel 'after a selloff' has a 75% chance of failing again for the same reason. Just like the odds of a breakout of a channel 'after a run up' has the same odds to run higher. And Triangles are the same thing with 75% odds of a breakout in the overall trend direction. They are continuation patterns and pauses within an existing trend. And then tend to 'continue' the existing trend when they breakout. Oh,oh. I'm rambling again,lol....