The One Word That Makes Markets Move Part 2

The One Word That Makes Markets Move Part 2

I asked a question of our readers in Part 1 of The One Word That Makes Markets Move. The question was what word?

The answer was “failure.”

A higher low is formed by a failure to break the prior low.

A lower high is formed by a failure to break the former high.

A double or triple top or bottom is formed by a failure to break a chart level.

This is further illustrated in my article, Why Retracements Work and How to Use Them in Your Trading where I pointed out 2 steps:

The first step is to understand why retracements work.

The next step is to find a way how to use retracements in your trading.

In Part 2, I created a video to further illustrate the point by pointing out when in a mature trend,  a failed retracement is often needed before there can be a fresh run at a new high (or low). The same logic Can be applied to an intra-day trend but I will save that for Part 3.

The One Word That Makes Markets Move Part 2

Here is a question looking ahead.

Can US stocks continue to march higher or do they need a retracement to shake out weak longs and then a failure to setup a new leg up. Just something to keep an eye out for in the runup to the US elections.

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