trading tutorial helps trading in the commodity market and stock market

Entries and Exits - continued

Exiting a trade on a drop below the bullish trend channel

Here is a bullish trend channel where all prices are contained inside the channel until the drop below. Stocks and futures can move above or below the channel and then recover. When that happens, there are more likely to be small range bars that take small "steps" forward. Contrast that with the big range bars in the example below. It's a clear case of weakness.

Bar 'A':

This is the first, clear cut, signale to exit the trade. First, the bar at 'A' has broken the bullish trend line, has also closed at the day's low and on extremely high volume (Note, extremely high volume with the close well above the low would indicate professional buying, but with the close at the low, it is very bearish).

Bar 'B':

This is confirmation of the weakness of bar 'A". It is also the second opportunity to exit the trade.

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