Reaction line

In addition to the stock price movement theory and model, trap-zones and money-making zones, today I want to introduce another important concept: the reaction line. Please note that this concept is invented by myself. Nobody talked about this before, to the best of my knowledge. Or may be partially, in other names.

The reaction line is super important because via observing its elasticity you can know where the market will go next. Very reliable !

The reaction line can be classified as bullish reaction line and bearish reaction line.

The good long and short entry point is around the reaction line during the reaction wave to test the elasticity of the reaction line.

Once no elasticity or very few elasticity is shown for the reaction line during the tests of the reaction wave. A possible transition of the reaction may be coming soon, which serves as a warning sign to act and to protect your positions as soon as possible.

The beauty of the reaction line is that it can help us to ride with the big wave and avoid losses when the trend is reversed and against us. Very very neat. Once I have the opportunities, I will explain how to apply it in more details.