The market fell aggressively after the capped trend line was perfectly tested and all the signs were there
Now that the market has rallied down to the supportive trend line I'll look for one of two things to happen:
1. Break - the support fails and the sellers resume
2. Bounce - a buy signal prints and the market bounces off the level
For both scenarios there will be criteria that has to be met in order for me to enter into a trade but for now, it's on the watch list. I'll be on the 4 hourly time frame where a signal can be picked up faster to allow for lower risk.
Once there is a lower low on this chart, it would be an indication that the bears may be likely to sell off again. Getting in right away is not always as fruitful because of false break outs that may occur so waiting for a pullback after the breakout can provide an entry with much lower risk and subsequently draw down as well.
Thanks for reading this idea, please share your view in the comments!
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