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chase the deer away, or vice versa, is that they are both being lazy, or they aren't certain who should be on the mountainside. It is easy to tell who has the edge, however, by observing which animal gets to eat and sleep in its preferred spot. |
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In other words, without the outdoorsy vernacular, in a bull market what was resistance for the bulls will often become support for the bulls upon any retracement. Should the bulls retrace past their previous resistance level, they will rarely go past a previous support area. However, should a bear market show up strong enough to spook the bulls, then previous areas that should have been support will fail. This is one of the first signs of a trend change. |
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When bears are in charge of the market, they will often retrace to a price level that was their former resistance level, and will rarely go past a former support area. Again, if the bears are unable to defend a former resistance area and then fail to defend a price that was support, they are weakening. Many novice traders think only of price as having support or resistance levels, when in actuality an indicator can also develop support of resistance levels. Figure 16-1 shows the bull/bear perspective from either a price or RSI perspective. |
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Figure 16-1
Bull/Bear Perspective |
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