Pinocchio Bar + MACD Divergence + Key Support Level + Fibo 61.8
The trade setup above is one of the best I’ve posted so far….
- MACD Divergence
- Key Support Level
- Fibo 61.8
- Pinocchio Bar (a.k.a. reversal bar or hammer)
This trade also demonstrates one concept… Look at the candle that is circled in orange… This candle’s low is lower than the previous two lows on the chart… Traders who trade breakouts might sell when price falls below the previous lows… In that case, they will be wrong and will be forced to buy to cover… This adds strength to the resulting rally, which probably explains why the next candle is such a strong bullish candle… The reversal bar is thus called a Pinocchio Bar (coined by Martin Pring) because it is lying to the bears that price is going to trend downwards… Bears who fall for the trick will then be trapped…
Most successful traders know that failed breakouts are always great signals… as it is in this case….
