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® “Home-Study Course” Study Manual Page 146
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Momentum And New Information
When a “Pyramid Trading Point®” forms, momentum has changed –
which causes the “Pyramid Trading Point®.” Maybe a news related
item came out, or momentum in the trend dried up.
The next thing to realize about the “Pyramid Trading Point®” is that if
prices exceed a pivot whether to the upside or downside, some NEW
information came into the market for traders to feel differently. Maybe
momentum returns or the “smart money” knows something we don’t.
Whatever the reason, all we know is that traders are pushing prices
beyond the old behavior that stopped them before. When this happens
we need to recognize that something is going on. This alone may be a
reason to enter a trade. Your reasons for trade entry will be further
strengthened with high volume.
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