Another scenario to consider: the market has pulled back hard three times in a row after hitting a downtrend line, and is now setting up to do it for a fourth time, really slowly, allowing everybody plenty of time to get short. Should you believe that you are staring at a guaranteed move lower? Certainly not! These are the moments to be most skeptical. This is when our mischievous opponent is sure to break the heretofore reliable pattern and trap a whole bunch of inexperienced traders who thought they had a sure thing.
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