10Reverting Back to theMean, or, “When Is the BestTime to Take a Profit?”

Where Do Markets Stop Their Current Trend and Run Out of Gas?

The pivots are great for establishing ranges in markets on an intraday basis. But what about for larger time frames, such as daily and weekly charts? Is there a way to establish extension levels to buy and sell against on a swing basis—positions that can be held for days or weeks instead of minutes or hours? Although this chapter has nothing to do with pivots, the general idea is the same. A daily pivot level represents an “average price” from the prior day’s trading, which is one of the reasons price is attracted to that level on the next trading day. It just needs to test it out and see if it will hold.

The ...

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