In almost all uptrends and downtrends after a particular market move, prices retrace a portion of the previous trend before continuing the move in the original direction. Studies show these countertrend moves tend to fall into predictable percentage parameters.
Sometimes a trendline needs to be adjusted. In the case of a steep line, as prices break the line, a slower trendline needs to be drawn. In the case of a flat trendline, a new line must be drawn at a steeper angle as the prices climb.
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