A trend in motion will stay in motion until it doesn't. We must remind ourselves of this self-evident truth, particularly at times when we anticipate a change in a cyclical or secular trend. We are tempted at times like these to "pick the high" or "pick the low." While this is potentially quite lucrative if successful, more times than not, we find that short-term price action is simply a "hick-up" in the larger trend. In those circumstances, prematurely betting against that underlying trend is usually quite painful. It is generally safer from a risk management perspective to wait for technical confirmation. This discipline allows the nimble trader to grab the "meat" of the price move if the technical confirmation proves correct. If on the other hand, this confirmation proves to be a false breakout or breakdown, one can set an objective stop-loss beforehand allowing for a swift exit before too much damage is done. So where are we now?
