The Pullback
The Market Tale (Oct 1, 2019)
“Here’s the pullback we’ve been waiting for,” Bull pointed at the chart.
“The Force is strong with this one,” admitted Bear. He has already tried shorting that pullback twice, only to be stopped out both times.
“Indeed,” said Bull. He tried longing, but couldn’t get a fill. Every time he placed a limit order to buy a little lower, the price simply pumped higher without even touching the order. The same thing has happened to him before, when he tried to short the recent breakdown by placing a limit sell order at a higher price — he never got a fill as well. Bull is starting to see a pattern here…
“Even though the pullback is strong, price-wise, it still lacks volume.” said Bear.
“Why do the low-volume pullbacks even happen?” asked Bull.
“Because of low selling pressure + high buying pressure. Those who wanted to sell have already sold earlier. That leaves us with empty orderbook on sell side. Imagine 10k at ask vs 100k at bid. Intraday traders see the difference, take out the ask, and push the price higher.”
“But that doesn’t mean that real uptrend has started. We haven’t broken the real resistance yet.”
“Exactly. The price is just going in the no-pressure direction, wherever it is. The second high-volume node will show the true, long-term trend.”
“If we don’t reclaim $10000… I believe we’ll enter a long bear market.” said Bull.
“I’m… looking forward to it.” said Bear.
Previous episode: The Slow Descent
Next episode: The Decision Point
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