This morning, the market posted a major squeeze. Price gapped down on the open, rallied for 2 candles to close the gap and then immediately sold off. CTrader showed an 80% long exposure all the way through the sell-off as many traders were already positioned long WAY too early. This is where the 20 rule comes in handy (never buy as long as price is below the 20 SMA!!!!)
Now price has almost reached the previous swing low at 1.6733. Amateurs will be forced out of their losses at some point and after such a squeeze, reversals traders are waiting for a turnaround. However, the 20 is still our main barrier to entry and we wait until price has broken it.
Rolf - QQ, good point on always waiting for the 20SMA cross on reversal trades - took me a while (and quite bit of money!!) to work that out - out of interest, how and where do you place your stop when the 20SMA cross happens? last swing low or do you use 2x ATR? would good to know your thoughts...