An awareness of potential levels of support when selling in downtrends is important.
It is easy to succumb to our emotions when the price drops.
Often, our emotions get the best of us leading us to panic sell.
My experience is that this capitulation occurs when we reach our max pain threshold, which often, unfortunately, coincides with a pivot point in the market, creating local bottoms.
I cannot tell you how often I see this in trading or business.
Have you ever noticed businesses close their doors just as the market reverses?
It is a fascinating phenomenon.
So, it is important to be aware of the technical support levels we attempt to identify in advance, keeping you in the market.
This can be avoided, however, by taking the first loss, which is difficult to do and subject to further discussion.