Friday, December 12, 2014

Crudeoil positional analysis 12.12.14 Update II

Strategies of Using Support, Resistance and Trend Line

Basically, there are two strategies which can be applied based on support and resistance. The first is called “bounce trading”, the second is “breakout trading”.

Bounce trading

Some traders call is as “swing trading”. This method uses the bounce that occurs from the support or resistance. The illustration below will visually explain bounce trading strategy.

The point is to wait for a bounce from the support or resistance area to execute a trade. Why don’t just put the trade right at the support or resistance level? Because you will need some kind of confirmation that the support or resistance has not broken yet. The fall or the rise of the price could be very sharp and rapid so that the support or resistance breaks immediately. This bounce is expected to be some kind of sign that the support or resistance level remains strong.