Thursday, September 27, 2018

Reversals or Emotional Zones

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Question:

So for pragmatic purposes, we can use Friday's close for the finalized weekly level. Should we hold that markup on the chart through the following week?

Thanks

Comment:

The market (or tape) will tell us.

Daily, weekly, monthly closes are just particles within the data stream known as the price. Most see just price and profit or losses, but it's really more complex than that. The data stream is human emotion. Reversal are active zones of emotion. The computer finds them as gaps, ranges of emotions that force price to jump above and below what normal volume can handle. Is Friday's close important? Not really any more important than the daily. UNG, for example, will likely jump fast if price closes above weekly (emotional) zone - 25.68 to 25.72 keeps showing up. If this happens on fairly decent volume, price will seek the next zone rather quickly. The next zone has a 26 handle. These zones change if price moves quickly and creates more gaps.

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