As trend lines go this one is a doozy. Taken from the May 2010 low, up and July 2011 high, down. There’s been quite a few fake outs but the squeeze is on.
If we zoom in to the H4 we can see that we’re right on the lower level once again.
So how do we trade this one? Obviously the chances are high of a bounce from the line so a long against it would make sense. But what of a break? The last attempts only yielded 30 odd pips.
At the very least it can give you a fair point for a stop. Buy the hold with say a 50 pip stop. Sell a break over 30 pips, again with a 50 pip stop in the hope that the trend line support becomes resistance. If you want to keep playing the pivot then reduce trade size and keep stops tight and manageable.
If you have your own formula for playing these types of events then please feel free to let us know.