Subtle changes in Market Behavior

For technical traders, it is possible to be bullish one day and bearish the next day. Look at a chart where prices have fallen and are now finding support at (a) a rising trend line (b) previous high. It is possible to take a long trade since this is a buy on dips setup. Next day, for whatever reason, the stocks gaps lower. The trader gets stopped out. The gap down breaks below the trend line giving a sell setup. Trader can get bearish. Small changes in charts at critical points can led to significant changes in perception.

To avoid repeated changes in perception, traders use long term charts to identify the long term trend. Then, they favor the setup which matches the long term trend.

But, at reversal points, the short term trend will reverse quickly and traders should be agile to capture these reversals. It is as such points that the bullish – bearish changes can occur with some frequency. That is the way the market behaves. Or rather, that is the way technical trading is done.