As we can see on the picture we have 2 examples on how to do it properly and a bullish engulfing candle for a perfect entry. So lets explain a little more:
1. First example is how not to trade it. The reason is simple. We haven't retested our support. You want the buyers to hold our support. If they don't, you don't enter. Quite simple.
2. This is what could've happened if a trader didn't wait for a retest on the support after breaking the resistance (resistances become supports after we break them, roofs become floors).
3. Our trader waited for the retest, saw a bullish engulfing candle and took the entry.
If you are going long you want your stop loss to be just under the support. If you are shorting you want your stop loss to be just above the resistance. Also, dont trade against the trend on higher time frames!
As we all know, no trading strategy has a 100% winrate so expect some loses, but remember the more confluences you have on your trade the more likely it is to play out. When you are looking for entries, you never want your RR (risk to reward) to be under 2. I don't recomend using time frames below 5 minute (even though 5 minute is a little messy too). Remember to use proper risk managment while trading and keep your mental strong.
Comment below if you have any fillers for this strategy and remember to backtest this on your pairs before making the trade. No strategy works on all pairs.
1. First example is how not to trade it. The reason is simple. We haven't retested our support. You want the buyers to hold our support. If they don't, you don't enter. Quite simple.
2. This is what could've happened if a trader didn't wait for a retest on the support after breaking the resistance (resistances become supports after we break them, roofs become floors).
3. Our trader waited for the retest, saw a bullish engulfing candle and took the entry.
If you are going long you want your stop loss to be just under the support. If you are shorting you want your stop loss to be just above the resistance. Also, dont trade against the trend on higher time frames!
As we all know, no trading strategy has a 100% winrate so expect some loses, but remember the more confluences you have on your trade the more likely it is to play out. When you are looking for entries, you never want your RR (risk to reward) to be under 2. I don't recomend using time frames below 5 minute (even though 5 minute is a little messy too). Remember to use proper risk managment while trading and keep your mental strong.
Comment below if you have any fillers for this strategy and remember to backtest this on your pairs before making the trade. No strategy works on all pairs.