Part 7/11:
- Downward Moves: Conversely, when the stock drops or approaches the lower boundary of the channel, traders might prematurely expect further declines, leading to panic selling. Recognizing the channel helps in maintaining composure and understanding that such variations are normal.
The Correct Approach
During sideways movement, the best strategy is to trust the technical pattern. If the stock remains within the established channel, minor fluctuations are expected, and sudden breakouts are usually catalysts for change—either upward or downward. Reacting impulsively to short-term changes without considering the broader context can lead to unfavorable trades.