First trend phase is called market accumulation. This is a trend period when market makers are taking their
positions. At this faze further direction of movement is unknown.
Second trend phase is called market distribution. This is a moment when market makers are done with taking positions and they wish that the price start to move in desired direction. At the distribution faze direction of further price movement is known. And traders are getting into positions.
Third trend phase is market acceleration which is caused by large speculative firms like investment banks, retirement funds, large private investment firms, hedge funds,etc.
Fourth and the last trend phase is called market consolidation which is caused by closing the
positions(profit taking). So market maker have decided to take the profit. Large sum of money will stop the market at the moment and start to go sideways.
After that cycles starts all over again! If you wish to learn more about market maker affect on the market then
read about INSIDER TRADING!
The best way to get in and out of a position is as it is shown on a picture. (But don't be greedy!)
For central line you can use exponential moving average.
Labels: trend behavior