Traders styles can affect how they view bottoms in the markers. Trend traders, by definition avoid, identifying tops or bottoms. While these traders may not technically pick a bottom, when they liquidate, they are responding to an indication that the market has turned. In terms of oscillator and indicator traders, they often refer to the market action as "oversold," but this condition does not necessarily constitute a bottom. With regard to chartists, their analysis is often driven by the patterns they choose, whether traditional triangles and head-and-shoulders formations or more sophisticated ones. The two most popular oscillators are the relative strength index (RSI) and stochastics. The best use of the RSI is implied by its calculation. The ultimate confirmation of oscillator comes from the price action itself. Chart patterns, meanwhile, are raw price data and, as such, often can provide the first clues to a market bottom. Among chart patterns, closing price reversal patterns are some of the most useful.
Catching the falling knife without a scratch James A Hyerczyk Futures; Aug 2010; 39, 8; Docstoc pg. 30 Reproduced with pe
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