2009.05.30 RULE OF THUMB: DO NOT REVERSE ON BREAKOUT CANDLES
Posted: Sat May 30, 2009 6:20 pm
2009.05.30 RULE OF THUMB: DO NOT REVERSE ON BREAKOUT CANDLES
The pirates were discussing trading after the market closed. One topic was trading reversals. The general consensus was NOT to enter a reversal on a breakout candle. It's better to let the candle close and then wait to see if price is reversing.
In the first example, you can see price broke through dynamic resistance and pushed the red dot up. A reversal trade would have been a loser.
In the next example, you can see price broke through the upper Bollinger band and reversing on a breakout candle would have been a loser.
RULE OF THUMB: DO NOT ENTER A REVERSE TRADE ON A BREAKOUT CANDLE.
The pirates were discussing trading after the market closed. One topic was trading reversals. The general consensus was NOT to enter a reversal on a breakout candle. It's better to let the candle close and then wait to see if price is reversing.
In the first example, you can see price broke through dynamic resistance and pushed the red dot up. A reversal trade would have been a loser.
In the next example, you can see price broke through the upper Bollinger band and reversing on a breakout candle would have been a loser.
RULE OF THUMB: DO NOT ENTER A REVERSE TRADE ON A BREAKOUT CANDLE.