Today’s lesson is about a trading strategy called “Pullback After Breakout Entry.” Here’s how it works in simple terms:
- Breakout: The price moves above a resistance level, showing potential for a strong upward trend.
- Pullback: After breaking out, the price often falls back a bit to test the former resistance, which now becomes a support level. This is where we look to enter a trade.
- Entry Point: We buy during this pullback, right at the new support level, anticipating that the price will start to climb again.
- Stop Loss Area: To protect ourselves in case the price keeps falling, we set a stop loss just below the new support level.
- Initial Target: If the price moves up as we expect, we aim to sell at least some of our position at a predefined upper target level to lock in profits.
Remember, this is a plan that tries to capitalize on the natural ebb and flow of the markets after a breakout. Stick to the plan, and always manage your risk carefully!
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