Forex traders have to have no given up attitude. With patience, discipline, and diligence they have to stick with a chart unless it is completely messed up. In today’s lesson, we are going to demonstrate an example of this.
The chart shows that the price makes a strong bearish move. It finds its support and heads towards the North for an upward correction. Look at the last candle on the chart. This comes out as a bearish engulfing candle, which the sellers wait for in such price action. If the price heads towards the downside and makes a breakout followed by a breakout confirmation, the sellers are going to trigger a short entry. Let us proceed to the next chart.
The sellers do not expect this. The price does not head towards the downside. It rather goes towards the North and roams around the level of resistance. It is painful for the sellers. However, observe on the chart that the level of resistance is still intact. The price may head towards the North but the sellers still have a chance. Let us see what happens next.
The sellers are on their toes again. The chart produces an inverted hammer followed by another long bearish candle. If the price makes a breakout and confirms that, the sellers are going to trigger a short entry.
Here comes the breakout candle. A good-looking bearish candle breaches the level of support closing well below it. This is an explicit breakout. The sellers are to wait for the next candle to close below the lowest low of the breakout candle to trigger the entry.
The next candle comes out as a bearish candle closing well below the breakout candle. The sellers must not waste a second here but trigger the entry right after the last candle closes. A dead-looking chart for the sellers ends up producing entry. Let us proceed to the next chart to find out how the trade goes.
The price heads towards the South in a hurry. It is quite a big bearish move, which offers more than 1R. A trade setup works wonderfully well for the sellers.
Let us recap the entry again. It looks good at the beginning. The price then goes towards the upside and it seems that it may not offer a short entry. The price finds its resistance at the same level; makes a breakout followed by a breakout confirmation. As far as breakout strategy is concerned, the sellers trigger a short entry and make a profit out of it. This is why traders must not give up but stick with the chart as long as it’s valid to produce a signal.