When breakouts erupt, follow the skills of the momentum trader. But recognize when price contracts and predictable patterns emerge. Use these repeating formations to execute the contrary tactics of the swing trader. Range motion alternates with trend movement. Trends are classified by their upward or downward bias.
Trends change and reverse at certain complex points of development.
Movement out of ranges will either continue the existing trend or reverse it. Ranges are classified by their repeating patterns, bias for continuation or reversal and the trends expected to follow them. Range volatility is highest at the interface between the prior trend and inception point of the new pattern. Range volatility is lowest at the apex point just prior to inception of the new trend. Trends exist in a state of positive feedback where price movement builds incrementally in a single direction.