28 Aug – Another TL with multiple failed breaks

I really wanted to trade this TL but after the first break you can see that it isn’t active. This area is active but not this specific line. It breaks, reverses, breaks to fill the gap and reverses again. This not trending PA and trading this TL would have resulted in seven losses. This presents a dilemma: the TL is cative on higher TFs and I don’t want to miss the break but if I trade this with my 10pt stops I will get whipsawed. The answer is to trade this on a higher TF using a PA stop loss such as a resistance zone or a TL – then if the pattern is valid I will still get the trade albeit at smaller size..

Taking a break of a TL into the gap fill is a low probability trade – there will most likely be a much better entry once it fills the gap and retests the TL. The gap would have been considered filled on the 12548 entry, that was still not a great trade but it did see 1:1.

But looking at this on the 3M chart shows how this time frame with Bolli Bands clarifies this PA and presents some nice opportunities.

Why I wanted to trade the TL

This is why I wanted to trade this TL so much: the H1 channel had pulled away from the upper line and looked set to break.

This is the outcome: it did break but it wasn’t ready to do anything magnificent and just went sideways for two days. But using a PA stop to trade it gives and nice entry and 1:1 or perhaps 2:1 trade.