STAGNATION'S
As mentioned above, the market can only move in three ways; up, down, or
sideways. However, what most traders call a "sideways" movement isn't
really sideways from the perspective of a scalper. What most people call
"sideways" is in fact a series of up and down movement that for a scalper is in
fact a series of petit up and down trends.
Only the scalper ever witnesses what can be considered a true sideways
movement – no change of price at all during a 60 second period. Such periods
of no change of price happen occasionally and on a chart it simply looks like a
flat line, like a minus sign ( - ). More commonly you'll see things that look
like plus signs ( + ), or what looks like the capital letter "T" ( T ) or an upside
down "T" ( _|_ ), or even a lower-case letter "T" ( t ). To people who are
familiar with "candlestick" terminology these are "doji". What these mean is
that during the 60 seconds of the formation of that candle that the price didn't
change at all (for the minus signs) or that the price moved up or down (or both
for the lower-case letter "T") but returned to the original price. Regardless of
which of these candles formed they all pretty much mean the same thing –
during that minute the market was undecided whether to go up or down.
It's a common trader saying, "when prices move up the bulls are winning, but
when the prices move down the bears are winning." The market is always at a
"tug of war" – the bulls try to force the market up and the bears try to force
the market down. When the price remains at more or less the same level it's
because the force from both sides is about the same thus no body is winning
the tug of war. This is why you get consolidation patters. (Sometimes you
also get a sideways movement before a Fundamental Announcement while
everyone is waiting for the news to be released.) Sideways movement is also
regarded as indecision in the market.
Take a look at the following chart.
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