Seriously… who would buy here?
Ok… enough talking in general concepts. I always get in trouble when I do this, because someone will email me including a chart which shows an exception to the rule.
Generally… it's not wise to buy in these areas.
And this brings us to the point of the article.
Consider it a "rule of thumb" for finding good trade locations.
One way to find areas on the chart which may show potential for a short entry, is to find the places on the chart where you think, "Who would BUY here?"
One way to find areas on the chart which may show potential for a long entry, is to find the places on the chart where you think, "Who would SELL here?"
Let's look at a trade based upon this idea.
We'll start well before the trade, as price pushes off the lower support level.
Who would buy after a long single-leg over-extended price move into resistance?
Certainly not me.
As always, this is personal opinion only. So feel free to do so if you think it's a good idea. After all, I need someone on the other side of my trade. 🙂