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Market Technique – 14M

Todd Butterfield April 19, 2022
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IMPORTANT POINTS

I. Supply and Demand is the basic economic law governing price fluctuations –
     a. When demand is greater than supply, prices rise.
     b. When supply exceeds demand, prices decline.
     c. When supply and demand are balanced, prices remain steady.

2. Technical Position –
     a. Weak technical position on the bull side is when the buying power is exhausted.
     b. Strong technical position arises when liquidation is completed.

3. Oversold and Overbought Positions –
     a. Oversold Condition is caused by failure of normal corrective rallies or too rapid an acceleration on a decline.
     b. Overbought Condition is caused by too rapid an advance or the failure to have intervening corrective reactions on an advance .

4. Rallies and Reactions –
     a. A reaction smaller than one-half is an indication of strength.
     b. A reaction greater than one-half is an indication of weakness.
     c. A rally greater than one-half is an indication of strength.
     d. A rally less than one-half is an indication of weakness.

5. A springboard condition arises on the bull side when the Composite Man has completed his accumulation and the mark-up is to follow; a springboard condition on the bear side occurs at the completion of distribution.

6. Volume relationships: an unusual increase in volume generally indicates the end or approaching culmination of a move. Dull periods (low volumes) generally indicate lack of interest except perhaps at the top of an advance.

7. Sponsorship and Price vs. Quantity: these factors should be considered in your market operations.

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