Jul 23
Resistance Becomes Support
Trade Setup: Buy one pip above candle A, or candle B.
Reason:
- Price just broke above downtrend line.
- Price is at a previous high.
- It appears that Candle A is about to reverse and turn bearish. It has a low that is lower than the previous two candles. However, it turned around and closed near it’s high. Bears are thus trapped. We can enter one pip above candle A, as bulls have proven their strength and support has been found at the previous downtrend line.
- Alternatively, a more conservation trader may choose to buy above the high of candle B, which is a pin bar. Contrary to what is expected of a pinbar, price merely dipped below the low of candle B, but eventually closed positively. Again, bears lost the battle and bulls proved their strength.
