When to trade a reversal of a break out above/below a KL or TL

Published by SallyU on 20 November 2018

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Sometimes the market will break a KL or TL, see a fast move outside the level and then grind to a halt. This indicates that there were stops at the level but not much appetite for opening new positions. In this case it is OK to trade against the break i.e. outside the Neutral Zone and against it.

This is an example of this kind of PA

The market sees a strong ON session, opens with an up gap and then breaks the TL and RES 1. But after just 20 pts it comes back to retest the level and bounces off it but this time, price is nowhere near the Bolli Bands.

Trading against a break of the Neutral Zone

These trades can be taken if price has slowed from it’s first impulse and lost touch with the Bolli bands. They are much better setups if they are at a levels of confluence, if the Bolli bands are horizontal and if they are in line with the overall trend.