Trading inside the range / Real example and trade Idea IBM
Today we have a long set up to share + a clear explanation of why we are developing this trade.
a) First of all, let's start on the weekly chart:
We can see a massive support zone. The price has reversed from there, and we can project previous resolutions to the current scenario. In this case, "expect a new bullish impulse."
b) Now that we have a clear Macro scenario, we will go to the current range.
c) When we are trading a Range, the most important thing is understanding: the Support and the resistance that make the range. Why do we want to understand this? Because those areas are Supply and Demand levels. and if we wait for the correct signal, we can trade with confidence towards the next Resistance (if you are on a bullish scenario) or towards the next support (if you are on a bearish scenario)
d) The idea of the previous item is to explain that you should NOT buy or sell a support or a resistance just because the price is there. As we said before, you need Filters. Which is our filter? Broken descending trendline + Corrective Structure + Enough distance to trade towards the next level with a risk rewards ratio above 1.5
e) In this case, we have all the previous conditions, and we will trade the breakout of the Flag Pattern. Entry above B / Stop below C / Break-Even first Fibo Extension / Take Profit on the 2nd fibo extension
f) We will cancel this setup if the price goes below C. We expect a resolution of 15 days as maximum if the entry is executed
a) First of all, let's start on the weekly chart:
b) Now that we have a clear Macro scenario, we will go to the current range.
c) When we are trading a Range, the most important thing is understanding: the Support and the resistance that make the range. Why do we want to understand this? Because those areas are Supply and Demand levels. and if we wait for the correct signal, we can trade with confidence towards the next Resistance (if you are on a bullish scenario) or towards the next support (if you are on a bearish scenario)
d) The idea of the previous item is to explain that you should NOT buy or sell a support or a resistance just because the price is there. As we said before, you need Filters. Which is our filter? Broken descending trendline + Corrective Structure + Enough distance to trade towards the next level with a risk rewards ratio above 1.5
e) In this case, we have all the previous conditions, and we will trade the breakout of the Flag Pattern. Entry above B / Stop below C / Break-Even first Fibo Extension / Take Profit on the 2nd fibo extension
f) We will cancel this setup if the price goes below C. We expect a resolution of 15 days as maximum if the entry is executed