Wednesday, April 8, 2009

2B pattern

When market makes new high or new low, there is always a pullback .After the pullback the market will retest the previous high/low. If the market fails to hold the new high/low, it signals a potential trend reversal. Trades orders are entered to sell the low of the bar trying to breakout or buy the high of the bar trying to breakdown. Target: The target is usually the ‘swing low’ prior to the new high or ‘swing high’ prior to the new low. Stop: Protect your ‘long’ trade entry by placing a ‘stop’ below the recent low and protect the ‘short’ trade entry by placing a ‘stop’ above the recent high.

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