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Beat the Street: A Trader's Guide to Consistently Scoring in the Markets by Adrian Manz

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Chapter 5. Extension Reversals

OFTEN TIMES, STRONGLY trending stocks will move too far too fast, making a pullback a foregone conclusion. A reaction open can take a stock much higher than is warranted. The result can be an immediate sell-off or a steady drift back toward the previous day’s high. When gap openings are followed by poor intraday price support, the stage is set for a move that will fill the void. Spotting these opportunities and knowing how to capitalise on them is one of the best ways to take money from the market. The key is to find moves in stocks that are showing all the signs of exhaustion. Trading the extension-reversal pattern correctly has proven to be my most predictable and most profitable intraday technique. This is ...

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