What does the failure of averages to reach new highs or lows during a secondary move indicate, according to analysts?

The failure of averages to reach new highs or lows during a secondary move is interpreted by analysts as a potential trend reversal. This behavior often suggests that the underlying momentum of the primary trend may be weakening. When the market fails to make new highs in an uptrend (or new lows in a downtrend), it indicates a lack of conviction from buyers or sellers, respectively.

Traders view this inability to extend the previous trend levels as a sign that the prevailing market sentiment is shifting, which could lead to a reversal. For example, in an uptrend, if prices fail to surpass previous highs despite ongoing upward action, it may imply that buyers are losing strength and sellers are starting to take control, potentially signaling a forthcoming downward trend.

In a similar vein, if you observe a downtrend that is not able to break previous lows, this might suggest that selling pressure is subsiding, which can lead to upward price action. The inability of price averages to achieve new extremes during secondary moves raises concern over the sustainability of the existing trend, making that choice relevant in technical analysis.