After studying this chapter, you should be able to:
Markets move in phases. Not being able to recognize market phases and their transitions will greatly disadvantage the practitioner. Market phase analysis can be applied across all time frames, deciphering long as well as very short-term market behavior. Via the application of multiple time frames, market participants will be able to clearly identify macro phase behavior and its impact on more diminutive micro phase action. In this chapter, we shall learn to interpret market phase via a multitude of technical approaches, both Eastern and Western.
As we have learned from Dow Theory in Chapter 2, a primary bull or bear trend consists of three phases, specifically:
This description of how markets rise and fall in various phases is now generally regarded as the basic underlying characteristic of market action.