Price Action: Trend Thrusts

Single-thrust pullbacks usually only occur at the very beginning of a market cycle, when the breakout is underway.

When the market is in the channel phase,

pullbacks usually consist of two or three thrusts.

In a small pullback bull trend,

bull limit-order traders will be quite aggressive.

This is the strongest type of bull trend.

If there is one time and place most suited for aggressive trading,

it is when a small pullback bull trend appears on the chart.

Buyers will place limit orders in the buy zone below High 1,

and add to long positions with limit orders at lower levels.

They expect price will not fall much

and a trend resumption upward will appear quickly.

Another pattern, which is sometimes also a source of profitable position additions,

is the spike-and-two-thrust pattern, also known as the ABCD pattern.

The second thrust gets split into two parts,

thus being called a wedge,

but its essence is still a complex ABCD pattern.

A strong trend works like this:

No single bar alone can give you enough profit,

so you must hold through a series of bars to profit.

A trading range is the opposite —

large bars suddenly appear

and then quickly reverse.

Therefore, understanding the characteristics of a trading range is very important.

You should expect that those seemingly clear, good opportunities

will either produce a deep pullback

or fail completely.

This is the core expectation you should have for any trading range move.

A strong trend requires sustained control over both time and price.

Here there is only control over price

but no control over time.