Today we bring a post about finding a similar situation to the current one in the past. Why is this useful? Because if we understand the resolution of a pattern that has already happened several times before, we can start using them to know what we want to wait for before trading.
We are using a Logharitmic chart so we can see the same proportions of % bullish and bearish movements despite the nominal movement.
What are the conclusions we have based on this?
-We have 5 examples of situations where the price dropped between 25 - 40 days with durations between 28 - 60 days.
- 3 of them provided bullish resolutions with great % gains after the breakout, 2 of them provided fake signals
-If we create adequate filters, we can avoid at least one of the fake outs (like waiting for the breakout of the more external trendline of the correction and then looking for a small throwback on a lower timeframe)
-The rawest scenario is one in which you trade all of these structures without waiting for confirmations. Using that idea, even if you had 2 stops, you could manage to take profits on the 3 scenarios with at least a 1:2 Risk Reward Ratio. Imagine developing setups with much more accuracy.
We hope this type of information can help you develop your own study cases on this type of asset to project resolutions to what is happening right now. Thanks!
We are using a Logharitmic chart so we can see the same proportions of % bullish and bearish movements despite the nominal movement.
What are the conclusions we have based on this?
-We have 5 examples of situations where the price dropped between 25 - 40 days with durations between 28 - 60 days.
- 3 of them provided bullish resolutions with great % gains after the breakout, 2 of them provided fake signals
-If we create adequate filters, we can avoid at least one of the fake outs (like waiting for the breakout of the more external trendline of the correction and then looking for a small throwback on a lower timeframe)
-The rawest scenario is one in which you trade all of these structures without waiting for confirmations. Using that idea, even if you had 2 stops, you could manage to take profits on the 3 scenarios with at least a 1:2 Risk Reward Ratio. Imagine developing setups with much more accuracy.
We hope this type of information can help you develop your own study cases on this type of asset to project resolutions to what is happening right now. Thanks!