3 Attachment(s) The formula I use is what I call long (Compounding Long Wicking). Using this formulation at all lines of service and resistance will give you an 80% or better success rate of this bounce. Below is an example of what we are currently looking for.
Chart #1 we are wating style and we view the price approaching a already defined UTL, (See White Arrow ). We wait to get a touch.
Chart #2 shows a touch and we will need to apply the straightforward formula to find out if we have a good chance of a bounce long. The wick of the candle touching the line needs to be more than the prior wick, (See White Arrows. If the formation exsists, we have a grat chance of going long here with a stop that is tight. Goal will be line of resistance or service. In this event a 21 pip goal with a 12 pip stop, I'd be yanking my profit here and shing stop.
Chart #3 shows a trendline break where I pull off half, however. You are able to see where the price came back and TESTED, The top of the line which is now support and formed. There's that phrase again, TESTED, I'm a huge believer in these words, TESTED, FAILED, RESISTANCE and SUPPORT.
This trade is 48 pips long today with profit pulled and added. Keep in mind points rule the roost. My advice would be to get out, if you hit on one prior to the trendline.
Jim
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