Chart Example - How to Identify High Confidence Reversal Zones

By: Elliott Wave International | Wed, Dec 19, 2012
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Senior Analyst Jeffrey Kennedy shows you to how to use 3 technical tools to find price reversals

"Price gaps, wave relationships and Fibonacci retracements act as support or resistance for countertrend price moves. When combined, these characteristics help identify high-probability reversal zones."

- Jeffrey Kennedy

Technical analysis offers several ways to spot pullbacks that indicate a reversal of the larger trend. When you use the Elliott Wave Principle, it can be very useful to "gain a consensus" from more than one indicator to spot a high-confidence trading opportunity.

The following lesson is adapted from Jeffrey Kennedy's December 11 Elliott Wave Junctures educational subscription service:

Identifying high-probability reversal zones is simple, IF you know what to look for.

In the daily chart for Akami Tech Inc. (AKAM), you can identify all 3 characteristics:

Using this information, you can see the very tight zone in which you may locate a probable reversal in this market (within the red circle).

Rather than focus on a single indicator, Jeffrey encourages you to combine them together to better identify high-confidence reversal zones in your price charts.

 


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This article was syndicated by Elliott Wave International and was originally published under the headline Chart Example - How to Identify High Confidence Reversal Zones. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 


 

Elliott Wave International

Author: Elliott Wave International

Elliott Wave International

Robert Prechter, Chartered Market Technician, is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

Elliott Wave International (EWI) is the world's largest market forecasting firm. EWI's 20-plus analysts provide around-the-clock forecasts of every major market in the world via the internet and proprietary web systems like Reuters and Bloomberg. EWI's educational services include conferences, workshops, webinars, video tapes, special reports, books and one of the internet's richest free content programs, Club EWI.

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