So how do we trade the Kangaroo tail?
Take a look at the chart. Notice how in this case the market, prints a kangaroo tail at an area on the chart that is an extreme high. The market has not traded here in some time. We could say that this kangaroo tail has much “room to the left.” and we expect a strong trend reversal.
For bearish kangaroo tails, if the market keeps trading higher, it will usually never trade lower than the low of the kangaroo tail. Thus, it is much safer to enter kangaroo tail with a sell stop below the low (for bearish kangaroo tails) will delay the trade entry until the market moves in the expected direction.
The stop loss for the kangaroo tail is placed on the other side of the tail, just a few pips beyond the tail.
Take a look at the chart. Notice how in this case the market, prints a kangaroo tail at an area on the chart that is an extreme high. The market has not traded here in some time. We could say that this kangaroo tail has much “room to the left.” and we expect a strong trend reversal.
For bearish kangaroo tails, if the market keeps trading higher, it will usually never trade lower than the low of the kangaroo tail. Thus, it is much safer to enter kangaroo tail with a sell stop below the low (for bearish kangaroo tails) will delay the trade entry until the market moves in the expected direction.
The stop loss for the kangaroo tail is placed on the other side of the tail, just a few pips beyond the tail.
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