Channel Surfing

Learning how to trade pauses can reward you with a very nice income.
Although there are many types of consolidation patterns and market
pauses, they all follow the same rules. So there are no complexities here.
But it does add to your trading success if you can identify them early,
which is a skill that has to be developed. Even so, if you do have problems
identifying them you can always trade the breakout of the pattern as it
exceeds the prior high or low. Even ifyou should miss out on the breakout
you may still get one final shot at it when it comes back to kiss the former
channel line goodbye. So pauses really give you a lot of breaks in trading.
A few of these breaks are shown in figure 3-6.

Pauses can provide you with advance knowledge regarding possible

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Does a breakout make you a little too nervous to actually take the trade?

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Again and

A kiss good-bye again s*

Chart courtesy ,ofMetaS9tock'"

Coffee

moves within a trend and offer a great low risk entry position to boot.
So a pause in the market can truly be the pause that refreshes, your bank
account that
IS.

Changes in momentum and trend shifts

A change in the market's momentum is another way that price will flip
sides on a channel line or have a changing of the guard. Throughout
a chart you will notice that price often changes its momentum by
increasing or decreasing a trends progression. Although these changes in
momentum will often start entirely new channel l ines at times they will
simply "borrow", even if only temporarily, a previous channel line. This
phenomenon provides a key point that you can use for gauging a market's

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