Michael J.

Parsons

between your entry and the reversal's extreme price. Figure 3-1 shows how
good of an entry this can be.

Although price breaks through the channel line. it still tries to return and kiss it good-by

Chart courtesy ofMetaS1Dck

British Pound

While price doesn't always kiss the channel line goodbye it happens
frequent enough to look for it. Failure to do so usually means that the
new trend will move very rapidly and far. If this is the case, then getting
in at the best price doesn't really matter as long as you do get in quickly
because you are still li kely to make money. However, if you hesitate and
miss getting in on such a fast-mover, it is best left alone. Quick moves have
a habit of springing back and catchi ng any Johnny-corne-lately for a quick
loss. If a market happens to gap away twice from the prior inside channel
line, then there is a good chance it will continue. Two gaps in a row tend to
show strength in any new trend. In any event, vigilance is needed because
volatile moves tend to swing both ways. Trading fast-movers is as much
an art as it is a skill.
Because a fast-mover is frequently difficult to judge, our focus is better
served on the pullback toward the previous channel line rather than the
runaway market. When price attempts to kiss this channel line good-bye, a
small trend will form that signals an entry when broken. That is as long as
this pullback doesn't exceed the prior high or low that ended the previous
trend. The reason that this works is because the prior channel line still acts
as an attraction and part of the inherent geometry of the market. When
you build a house you butt the end of one wall against another. When bees
build a nest, they join one honeycomb cell to another. When you write a
letter, you follow each word in sequence. When multiple parts are joined

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