Tuesday, January 6, 2015

Crudeoil positional analysis 06.01.15 Update I

Danger of trend line break

A trend line break type of trade appears fairly obvious on back testing but applying it during actual trading is not. A commonly encountered phenomenon is the false breakout – price appears to break but returns across the trend line at the close of the candle or even at the next candle.

Sophisticated traders may pair a trend line break trigger with a time element. For example, a trend line is presumed to be broken if price is able to cross X price by a certain time. This time plays the role of a restraint or filter. If price returns across trend line at the end of the duration, the observed trend line break is a false one. The reason to apply such a setup is to avoid false breakouts.

Read More : http://www.terraseeds.com/blog/2009/12/trendline-break-and-its-implications/