The perfec trend line's break must include 4 steps:
1) break of the trend line (much better with a decisive candle)
2) reach of the last support/resistance zone showed prior to the line break
3) retrace to the broken trend line
4) Re-start of the new trend.
We buy or sell at the begining of the 4th step
Here we have a nice setup for this concept, where we can find at the 3rd step several signs of resistance:
1) deep retrace fibo levels (61.8% or 76.4%)
2) past resistance levels at this zone
3) the presence of indecision for the bulls, expressed in candles with real small bodies and big shadows (here more important in the top side).
If a clear reversal pattern appears we should sell with stop loss at the highs and the nice thing for this trade is that could be a good entrance to try to ride a brand new trend.
1) break of the trend line (much better with a decisive candle)
2) reach of the last support/resistance zone showed prior to the line break
3) retrace to the broken trend line
4) Re-start of the new trend.
We buy or sell at the begining of the 4th step
Here we have a nice setup for this concept, where we can find at the 3rd step several signs of resistance:
1) deep retrace fibo levels (61.8% or 76.4%)
2) past resistance levels at this zone
3) the presence of indecision for the bulls, expressed in candles with real small bodies and big shadows (here more important in the top side).
If a clear reversal pattern appears we should sell with stop loss at the highs and the nice thing for this trade is that could be a good entrance to try to ride a brand new trend.