Do you remember the contour of the remaining apple?
Doesn't it look like the shape of teeth and jaw of the person who took the bite!
Does it look like the following graph?
Well, between any two base points, a priceline graph moves as a circle, like a curved tent roof!
The price movement always tries to take that path unless forced by some extraordinary, unnatural fluctuation!
But even after the fluctuation, the priceline tends to return to its original circular trajectory.
This is called "Outer Circle" theory.
According to the outer circle theory, the priceline retreats to complete the circle after the "missing bite"
In other words, the blue line was the path the priceline was originally going to take. It was disturbed ("bitten") by "disturbing" market forces. The priceline will retreat and complete the balance circle.
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