Things To Lookout For When Trading Pullbacks
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When you’re trying to get long, the market doesn’t give in and test your resistance level. Instead, it keeps moving higher without stopping at a certain point for traders who are waiting on that pullback towards support! If this looks familiar to you, You’re not alone. There are so many traders out there who miss out on the pullback because they don’t the things we will tell in this article.
Find A Trend To Trade
Sometimes it can be hard to spot a trend, but if you take the time and look for things that might indicate where prices will go next then your chances of success increase. The first step in pullback trading is identifying what type or direction markets may turn next – this makes sure there’s something worth investing into!
If your trading timeframe is 4 hourly, make sure there’s a trend on that timeframe. If you want your pullback to work, there must be a trend. When you find confluences on the chart, these are considered the best crypto signals. That you can use to trade
Type Of Trend
Not all the trends all the time are equally powerful. Some are ridiculously impulsive and go on a streak making higher highs, some register decent pullbacks before going up, and some are weak with little buying pressure and no selling pressure.
That’s because you can easily identify valuable areas on your charts, so now all that’s left for you is to enter a great pullback trade.
Area Of Value
When the market is in an up-trend, one specific area on your chart becomes a potential target for buying pressure. This spot could be where prices may step higher and trade above their current levels. For example, let’s say your chart has a 20days moving average indicator. When the price goes above the 20ma, the price will come back to test the moving average line. And when you have a confirmation that the price is going to make a move upwards, you make an entry. That support level is the area of value.
Timing The Trade With Entry Trigger
An entry trigger is a point of entering the trade after you’ve analyzed the chart and all your conditions are met, which are the above-mentioned points. An entry trigger could either be a breakout or pullback and retest.
Timing The Exit
It is crucial to exit the trade when; 1) the trade is not going your way. 2) when trade is going as expected.
Whenever a trade is placed, there’s always a chance that the market could go in the opposite direction. So the moment you see your strategy or setup being nullified, you should exit. For example; if you see the price closing below the 20 MA, chances are the price may dip further.
When your trade is going as expected, don’t let your emotions get the best of you, always exit on your target. Yes, the price could go higher, but so can lower. Securing profit is always the best strategy.
