How to Trade Double Tops and Double Bottoms

  • 2023/2/25 14:01:19
  • read: 6
  • forextradingsessiontimes

Key Points: Traders can consider using breakouts forex forextradingmarket session times fades to trade forextradingtime tops and double bottoms Before entering a trade, traders can wait for a signal to confirm the cashback forex movement before entering For technical traders, one of the biggest benefits of trading price movements is that they can see how market sentiment is changing as prices move. The chart below is a very good example of a double bottom: we can see that after an elongated downtrend, price bottomed in two separate places, but failed to build a larger drop Since price failed to break below that level twice, that means there must be something unusual about that level Unfortunately, we have no way of knowing exactly why the level is so unusual, and we cant decide whether we should be short or long, but the level does deserve the attention of traders Price rally may have a variety of reasons – perhaps a large company happens to set the level as an entry point, or the price is a very critical Fibonacci support level But regardless of the reason, the important thing is that we can use the level to develop our own trading strategy double bottom or double top breakout trading strategy as similar to other breakout trading strategies, trading double top or double bottom breakout is to expect the price movement to continue the previous trend and wait for the previous support or resistance level to be broken on the third attempt before entering the market the following chart as an example: In When trading a double top or double bottom breakout, traders need to keep in mind that, as with any other breakout trading style, price may also reverse again and continue to pull back for a period of time When trading a double bottom breakout, because price has already reversed twice before, we have every reason to believe that price may reverse again after breaking support and executing our pending order, in a triple top or triple bottom situation So So, when executing this type of trading strategy, it is still prudent to manage risk and set the risk-reward ratio to at least 2:1 or more double top or double bottom fade trading strategy trading double top or double bottom fade is the exact opposite of the previously mentioned breakout trading strategy – traders trading the fade strategy would expect price to reverse again after hitting support or resistance levels also unlike breakout trading The following chart is a good example of trading a double bottom fade:  Once the price has broken through the resistance line, traders can consider entering. look for confirmation of a buy signal for a breakout of the resistance level If, on the contrary, we were trading a double top fade, we would look for confirmation of a sell signal