If the price had hit the blue line going downward, then it would have had to have traveled the same number of ticks as the first thrust downward. If the length of the second thrust is at least equal to the first one, then the current channel is at least as strong as it was when it was formed. If that was the case, a BO would be much less likely. The blue line doesn't exist, none of these do. I just drew them in order to explain how price is moving. Edit: Give me a second to get a clean picture to show what I mean.
Here, I am not claiming any ultimate significance by this slowing of pace, but it is merely an indication of weakness and I've found that the channel is more likely than not to have a BO followed by a change in the dominant direction when price starts to slow down like this. Edit for clarification
Thanks,yes it`s clear now.But where does the premise that the second move should be shorter in order for price to reverse come from?What`s the basis behind it?
Observation and testing. If pace is accelerating, it isn't likely to reverse in the opposite direction all of a sudden. If pace is getting weaker and weaker, the dominant direction of price is more likely to change. Reminds me of those carnival games where they strap a giant rubber band to the kids and let them run as far as they can along an inflatable lane. As they get to the end of the lane right before they're pulled back, the last few steps are much slower and cover much less distance than normal. These aren't rules though, and I don't try to make predictions. They merely indicate the likelihood of future possibilities. When pace slows and price isn't heading as strongly in one direction, I am more sensitive to a change in direction than I would otherwise be.