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Wednesday, March 16, 2011

What Does the Chart Tell Before Earthquake

Sendai earthquake caused the Japanese stock market Nikkei 225 lost more than 16% or 1649 points. On the hindsight, one can avoid the gigantic loss if he were to follow technical analysis rules strictly.

Take a look at below chart, on 10 Mar--one day before the earthquake, Nikkei already broke its triangle and horizontal support-- 1st selling signal. The next day 11 Mar, Nikkei opened gap-down, and technical rebounded--2nd selling signal. The earthquake happened only at 2.46pm(JST), 14 mins before market close. If one to follow rule to cut loss once break support, the aftermath loss--cruel pain in next days could be avoided.


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