Study on Action and Reaction Lines: In this Course you should realise the importance of A-R lines. When a man who had made over $50,000,000 attributes his fortune to this principle that Action and Reaction are equal and opposite, you too will find that they can increase the odds enormously in your favor by knowing what they tell you. One reason you will make consistently large profits is because you will sell after rises and buy after declines. When one check the reason for past losses in stocks or futures, he invariably finds he has done just the opposite. To use this method, you measure the distance from a center line such as the 0-4 line shown here. In a rise you measure back to the top pivots in order to find an equal distance to future low pivots. You do this easily by drawing parallels as shown. The R1 line lets prices drop through before the price rallies back the next day to this line. When price drops through it indicates that the previous trend will continue. When as in this case the rally back to the line is small shows you that the prices will move lots more in the original direction to the next trend reversal at the next R line. In R2 prices gapped, a gap being a negative reversal. This fact was first shown in this Course. A gap is nearly always followed that same day or the next with a reversal or another gap.
One the trend line was crossed by the closing price on February 10th a short sale could have been made and held from 72 price to the present as prices continued to drop though every R line.