Chart Analysis ~ Trend Breakdown & nesting under…

Trend Breakout & nesting under…(1)

The action here starts after the trend is topping. There is a head and shoulders but not quite visible, so we can define as a Tradeble event the fact that the trend is broken first of all and looking back (or over the shoulder !!!) we can see the Head and Shoulder formed at the top so we can start hunting for entry points. I named the congestion under the breakout line “the nesting zone”. The difficult thing here is that there is no clear entry point and no clear Stop Loss because the breakout line is ascending! We have a tow bar reversal (blue ellipse) which is a good signal. So, based on this we can consider an entry point at the base of the 2 bar reversal formation and Stop Loss above the green bar from the 2 bar reversal. The dotted line could also be an adding signal for aggressive traders.


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Posted on June 23, 2010, in Chart Analysis and tagged , , , , , , , . Bookmark the permalink. Leave a comment.

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