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December 18, 2018 at 4:00 am #28527AnonymousInactive
Bump-and-Run Reversal Bottoms and trading signals
The formation looks like a frying pan with the handle on the
left sloping downward to the pan. After a deepening decline
that takes prices into the pan base, prices level out and
eventually soar out the right side.
The handle forms a down-sloping trend line that approximates
0–45 degrees (but this varies with scaling). The handle portion
of the formation is called the lead-in as it leads in to the bump
phase. The lead-in height measures from the trend line drawn
across the highs to the low (not necessarily the lowest low) of
the formation. Select the widest distance from the trend line to
the low, measured vertically, in the first quarter of the
formation. The duration of the lead-in should be at least a
month, but varies depending on the situation.
The bump is analogous to the frying pan base. The downsloping
trend line deepens to 60 degrees or more. Prices drop
rapidly then level out and turn around, usually forming a
rounded turn. After the turn, prices move up and sometimes
pause at the 30-degree trend line before moving higher. The
bump height, as measured from the trend line to the lowest
low, should be at least twice the lead-in height. Strict
adherence to this rule is not required, but it serves as a good
Uphill run Once prices lift out of the bump phase, they begin an uphill
run that carries prices higher.
Measure rule. After properly identifying a BARR bottom, you will want
to determine how profitable is a trade likely to be. You do that using the measure
rule. I changed the measure rule from a computation to simply the top of
the chart pattern. The highest high is the target, and prices reach the high 64%
to 68% of the time.
Wait for confirmation. The confirmation point is when price closes
above the trend line formed during the lead-in phase. Should the price close
above the trend line, buy fx trading signals .
Sell at old high. I have discussed how often a fx pair showing a BARR bottom
stops near the old high (which is the start of the formation). Place a sell
order near the price level of the old high. That will keep your profits intact
should the pair then turn down. If you are reluctant to sell your holdings, why
not sell half when the stock reaches the old high, then see what happens?
Stops. As always, place a stop-loss order 0.15 below the nearest support
zone. Move the stop upward as the forex advances. That way, when prices turn
down, you will not lose too much. Only paying taxes is worse than riding a
forex up and following it all the way back down.
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