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Friday, April 20, 2012

Channel Overshoot And Failure

PNRA daily chart shows an example of of Al Brooks' "channel overshoot and failure" as per my notes here.  The upper trend line (dashed line) of the projected down channel is constructed by replicating the lower trend line and placed  tangent to the highest price point.  As shown where circled, we see an overshoot of this channel, but then it retreats back into the channel.  That's an indication of weakness.  A sell order on the next morning would have done well.

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