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Let me
see. If we assume a wide trading range (an extended top, consolidation or
base):
<SPAN
class=40431820-28012001> The price action described by AB is a
high velocity advance which tends to overwhelm shorter term cycles. The risk is
in selling or shorting the advance prematurely.
<SPAN
class=40431820-28012001> As price moves from B toward C,
shorter term cycles come back into play. However, the range of the swings tends
to become smaller as price approaches C.
<SPAN
class=40431820-28012001> At C a mid cycle low which fails to
reach the extremes of the wider trading range at A and E is
anticipated.
<SPAN
class=40431820-28012001> Across C to D, the range of price
action tends to expand again as price works up toward the top of the wider
range.
<SPAN
class=40431820-28012001> The price action described by DE is a
high velocity decline back toward the bottom of the wider
range.
<SPAN
class=40431820-28012001>
This
describes the idealized pattern, of course. When they work, patterns make
price action somewhat more predictable. The abstract pattern isn't
tradable, but the extent to which price action corresponds with or deviates
from the anticipated pattern can impact trading decisions.
<SPAN
class=40431820-28012001>
Now for
those option strategies...
<SPAN
class=40431820-28012001>
<FONT
size=2>-----Original Message-----From: Ira Tunik
[mailto:ist@xxxxxx]Sent: Saturday, January 27, 2001 1:30
PMTo: realtraders@xxxxxxxxxxxxxxxSubject: Re: [RT] DJIA
DAILY: BOW TIE<FONT
color=#0000ff face=Arial size=2> <FONT color=#000000
face="Times New Roman">.... Each part of your bow
tie has different price action and therefor a different strategy would be used
to extract profits<FONT color=#0000ff face=Arial
size=2> ....
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