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THE MARKET WHISPERER 35 9

is generally referred to as Fair Value. This indicates that the majority of
buyers bought during the previous day at the average found at [3]. When
the current day’s price drops below [3], all those who were caught in the
wrong direction get trapped. The closer the gap-closing point is to the
pivot, the more disappointed buyers there will be seeking to exit the stock

if it keeps dropping, which pushes the reciprocal range process along even

better.

SMART The entry point for reciprocal range trading will be at
MONEY the breakout or breakdown of the technical formation
emerging above or below to the gap-closing point.

Analyzing reciprocal range trading in the opposite direction is exactly
the same. When a stock opens with a down gap, rises to close the gap,
reaches the closing price, and continues rising, it is reasonable to presume
that it will allow us a chance for good, long reciprocal trading. In such a
case, the trapped ones are traders who entered into a short around the
previous day’s pivot point, and are now forced to buy when they move into
a loss.