Change of Market Character
“As a trend develops, the reactions, or pullbacks, tend to become smaller. Traders looking to enter the trend wait for reactions to place their orders. As the move becomes more obvious, these reactions will get smaller and the increments of trend movement will become larger. When the reaction suddenly is larger, the move is ending; the change in the character of the move signals a prudent exit, even if prices continue erratically in the direction of the trend.”
–Perry J. Kaufman, from Trading Systems and Methods, 3rd edition (1998, John Wiley & Sons, New York).