PRICE ACTION:
• In an uptrend, price action finds first resistance (1), where it reverses direction and goes downwards till finding support (2).
• Price action reverses direction from (2) and goes upwards till finding second resistance (3), which will be -around- the same rate of the first resistance (1).
• The pattern is completed when price action reverse direction from the second resistance (3) and goes downwards till it breaks the lower support at point (4).
TRADING THE PATTERN
• Trade entry: the pattern is traded after price action breaks the pattern's lower support at point (4).
• Take profit: identified by measuring the (upper border - lower border) distance, which is the vertical distance between point (2) and either (1 or 3 - according to which one was used to define the upper border), that measurement is then applied from the breakout point (4).
• Stop loss: the pattern's support (2) which turned into resistance after the breakout.
• In an uptrend, price action finds first resistance (1), where it reverses direction and goes downwards till finding support (2).
• Price action reverses direction from (2) and goes upwards till finding second resistance (3), which will be -around- the same rate of the first resistance (1).
• The pattern is completed when price action reverse direction from the second resistance (3) and goes downwards till it breaks the lower support at point (4).
TRADING THE PATTERN
• Trade entry: the pattern is traded after price action breaks the pattern's lower support at point (4).
• Take profit: identified by measuring the (upper border - lower border) distance, which is the vertical distance between point (2) and either (1 or 3 - according to which one was used to define the upper border), that measurement is then applied from the breakout point (4).
• Stop loss: the pattern's support (2) which turned into resistance after the breakout.