A Throwback is just a term used to describe the price movement when an asset (in this example BTC) breaks free from a barrier of resistance and then re-visits the same barrier as a support level.
On the throwback, a trader would like to see the price bounce from the barrier confirming the "barrier" is still there, but acting as support.
Newcomers can often mistake a throwback for the price over-extending and crashing, resulting in them closing positions early or being liquidated on late entries.
The reduction of positions can allow experienced traders to capitalise on the less crowded trade and (if the bounce was sufficient) move the price further than leg 3.
How To Trade:
1. Observe the extended accumulation phase.
2. If already in a position follow with stop-loss as the price discovery can be fuelled with fomo which can lead to panic selling.
3. Have buys set at the "barrier".
4. Stop-loss below barrier
5. Profit on the bounce.
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On the throwback, a trader would like to see the price bounce from the barrier confirming the "barrier" is still there, but acting as support.
Newcomers can often mistake a throwback for the price over-extending and crashing, resulting in them closing positions early or being liquidated on late entries.
The reduction of positions can allow experienced traders to capitalise on the less crowded trade and (if the bounce was sufficient) move the price further than leg 3.
How To Trade:
1. Observe the extended accumulation phase.
2. If already in a position follow with stop-loss as the price discovery can be fuelled with fomo which can lead to panic selling.
3. Have buys set at the "barrier".
4. Stop-loss below barrier
5. Profit on the bounce.
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