"You can observe similar types of gapping-up action in strong markets too, but in this second case you will have an old (sideways) trading area to the left. Traders who have become trapped within the channel (sometimes referred to as a ‘trading range’), either buying at the top and hoping for a rise, or buying at the bottom and not seeing any significant upwards price action, will become demoralised at the lack of profit.
These locked-in traders want only one thing – to get out of the market at a similar price to the one they first started with. Professional traders that are still bullish know this. To encourage these old locked-in traders not to sell, professional traders will mark-up , or gap up the market, through these potential resistance areas as quickly as possible."
How can one be sure that gapping up "discourage locked in traders to sell" after saying in the 1st paragraph that those locked in traders are a bit disgruntled with the lack of profit.
On the contrary, I would say that encourages locked in traders to sell.
I am still very, and increasingly, skeptical about this book. (some of it is very good but it is also common sense)
LYC Price at posting:
59.0¢ Sentiment: Hold Disclosure: Held
