Frequently, prices will temporarily flatten out, as shown at the far right of this chart. This chart immediately follows the one in my last post. Anything can happen at this point. Prices could continue to climb still higher, or a reversal could ensue. After a sustained rally such as today, a sudden reversal is unlikely, unless some news event has just broken that reverses sentiment. The more sustained the rally, the more attention I will pay to higher time frames.At this point, I will begin to look at the higher time frames for guidance, especially the Klinger Volume indicator, which is the best leading indicator I've seen. The 3-minute chart below shows waning volume and momentum.
The 15-minute chart below shows that we have reached resistance, but that resistance is weak. The 15-minute Klinger Volume indicator continues to show continued upward volume. However, the 15-minute Bollinger Bands show that momentum is also beginning to wane. I also consider on the higher time frames where prices are in relationship to the Bollinger Bands. If prices are close to the upper Bollinger Band, I anticipate that there will be a "rubber band" pull-back, since from a statistical standpoint, prices are temporarily overbought.
I will continue to hold, but if prices don't push higher through my Bollinger Bands on the tick chart, I will probably liquidate my trades fairly soon.
