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Technical Analysis Explained, Fifth Edition: The Successful Investor's Guide to Spotting Investment Trends and Turning Points, 5th Edition by Martin J. Pring

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18 MISCELLANEOUS TECHNIQUES FOR DETERMINING TRENDS

We are going to start off with the concept of proportion, which is concerned with offering some ideas on the possible magnitude of a price move. I deliberately emphasize the word possible because there is no known technique that can consistently forecast magnitude or duration. These techniques should be used only as an indication of the probable extent of the move, not as the basis of an actual fore-cast. Perhaps the simplest way to explain the principle of proportion is to say that crowd psychology, as reflected in market prices, has a tendency to move in specific proportional amounts that have a habit of repeating, but unfortunately not in a predictable pattern. Thus, we could say that stock ...

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