In How and When To Buy a Deep Market Correction Part I. I showed a simple and objective balanced swing technique to find a Change in Behavior (CIB) in the deep pullback. In this lesson, we ground the teaching by doing step-by-step practice in stocks, currencies, futures, and Bitcoin. We finish with lining up live examples in some weekly stocks.
Practicing this simple technique will teach you to follow a deep pullback rather than trying to predict it. Make your own observations and discoveries about ways Change In Behavior can be applied.
I use this technique for any deep pullback in any market and especially when the stock market has gone into a recession. It allows me to follow and wait patiently to take part in the next growth cycle while everybody else speculates about nonsense.
When a market is in the process of doing a deep and prolonged pullback, we need some simple and objective techniques to show us when the market is turning back up so that we stay out of bottom-picking trouble. We want to be able to follow a deep market correction patiently through its change, so we are going to use the principle of Change In Behavior (CIB). We will use 2 confirmed balance swings in a deep pullback as our Continued Behavior so that we can determine when price flow has a Change in Behavior. This allows us to wait patiently for volatility to organize itself and show us what needs to change for the deep pullback to be over.
In Design Your Own Trading Methods: Part 1, we developed an understanding of the different phases of a swing cycle and how it moves in contraction/expansion so we can develop tactics for various parts of the cycle. In this next step, I go over some of the principles of price flow and define the components, and process of a swing so we have an objective frame of reference. With just this step of mapping, you never have to ask anybody what they think about a particular market, you just look for yourself and see what is true.