Opening long positions from a counter – trend in a downtrend is effective if the price has broken the trend from the bottom up and closed above the trend line. In other words: the price breaks through the resistance level, goes above this level and after a while corrects to it. In this case, the resistance line becomes the support line and is the optimal place to buy.
Additional confirmation can be obtained by plotting Fib levels on the chart. This trading strategy provides an opportunity to select false movements that create the illusion of a change in the prevailing trend. You can also understand whether you need to enter the market or wait for the moment when the picture becomes clearer.
Selling from the counter – trend.
The logical move is to open a short position from the counter – trend, which previously worked as an uptrend. After the price breaks down, the support line becomes a resistance line. This trading method has a great effect, it is also considered an effective way to enter the market for sale.
Fibonacci levels can confirm the effectiveness of the breakout. The chances for a successful sell trade are increased if an uptrend turns into resistance, and corrective movement levels are found near it.
