Predicting Market Turns with Price Action
If you watch market action closely you will pick up on a reliable market pattern. Strangely enough it is almost totally independent of the time frames you use. It does not matter if you are using 1 minute 15 minute, one hour, daily or even weekly time frames. Watch this video or any of your charts on any stock, ETF, or index and research this for yourself. You will find that the market reverses itself after runs of 3-4-5 or 6 consecutive trends. Technically this is called the Reversion to the Mean. After a short run like this it seems to just run out of gas.
SOURCE: Futures Blog by Bill McCready – Read entire story here.