“b” as in Bottom The most interesting insight from such a comparison is the similarity that jumps out between points “b” on the charts. Both of them occurred when the long term and the shorter term moving average where both declining and when there was an extreme distance from price to moving averages. Both of them were “panic” or spike declines where the intensity of the selling fed on itself until reaching a crescendo and reversing sharply.
It isn’t too difficult to imagine the same sort of conclusion. One where the market falls once more but not beyond the swing lows it has already marked. This allows for the sideways action or basing which ameliorates the steep slope of the 200 day moving average and eventually sets up for a final push which takes price, along with the 50 day moving average, above the long term average.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.