When price moves a greater distance over a lesser period of time, individual chart bars and candlesticks expand in length. This range expansion signals those points of greatest opportunity for traders and investors. Clear Air identifies horizontal chart levels where prior stock trends exhibited sharp price expansion in either direction. The stronger the CA event, the more likely that price will trigger volatility on the next pass. This tendency allows traders to locate outstanding trades with little more than quick visual scans of their favorite stock charts.
Congestion limits volatility.
Range expansion represents the state of least congestion and greatest volatility. However, it cautions traders to manage risk closely as opportunity and danger stand side by side. Although price may have sharp momentum in one direction, defense trading must be exercised. Clear Air space can produce violent reversals. Since traders tap detailed price and volume from prior passages, those points can be used for cross-verification to reduce risk.