understanding and avoiding whipsaws - II

how do you coem down from 5th floor to the ground floor?
do you use a slide (like the one in the kids playgrounds)
or do you use stairs?
obviously, stairs.
isn;t it surprising that in stock markets
we have both
- slides, as well as
- stairs
for the prices to come down or go up!
rather there is one more way
- the drop!
but the good news is
that their is no fourth way!
so, in other words
if you can train your eye to spot the three formations in a price chart
and understand when which one is used
you can foresee the presence or absence of whipsaws!
e.g. a slide typically happens when the trend is about to start.
a staircase if used when the trend has started and is continuing and about to continue.
a drop generally, happens when there is a sudden panic sell-off or sudden change in the fundamentals.
these, three are just examples and are neither absolute nor exhaustive!
all i have realised and want to say is
that these three ways are the only ones which i see liberally spread in every chart that i open.
i have realised that if the price is coming down or gong up using a staircase,
then i should expect and anticipate a rangebound consolidation or contraction
after the spike marking the vertical axis of a stair....
we can understand and anticipate the presence or absence of whipsaws
by focusing on the need for the same.

(niftyshots.blogspot.com)