breakout (consolidation forms and then the price drops below consolidation low) or bearish engulfing pattern to signal our short trade. The following is a low risk trend trading forex strategy but it requires evidence that a trend is actually in place. The caveat is that if SPY falls more than 10 you will still have to buy it at 216. Using a volatile stock (or other asset) greatly increases the chances of success using this strategy. We buy if the price moves above the high of the consolidation. With a bullish engulfing pattern we can either wait for the bar to complete, or typically I will enter a trade as soon as I see the pattern in real-time. Only take a trade, even with these strategies, if you can reasonably expect to make more than you will lose. An alternative profit target method is to assume that the price will breakout the opposite side of the pattern. The signal must occur during a pullback. This strategy should only be used in stocks (or other assets) with volatility, and there should be lots of movement preceding the triangle. An ascending triangle is when the swings highs are at the same price, but the second swing low is higher than the previous (horizontal upper trendline, ascending lower trendline).
If a stock is typically quiet, triangles will occur frequently throughout the trading day, but in that case, a triangle doesn't indicate the price is going to see big movement when the triangle completes (price breaks out of the triangle). By making this small adjustment, and altering the trajectory of the trendline slightly (but it still aligns with the price action) we are often able to use the trendline more effectively and potentially extract more trades. The highs and lows dont need to be the exact same price, but they forex trading exam should be quite close. We continue to do this as long as the price is making lower lows and lower highs. Trends tell us in which direction to tradein the trending direction.