Learn How To Trade – Trapped Traders® Daily Analysis – Buying GBP/USD
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And the trade we’re going to look at is this trap break pullback that occurred the other week in the GBP against the USD. I mentioned this the other day, but now we’re really coming back into that level and we’ve just had some good data out the UK this morning. However, we do have Fed Yellen speaking later today, so do be a little cautious of that.
But essentially how this works is you had a previous level of support and then it breaks and breaks strongly down through the level like that. And that tempts people to go in, breakout traders, etc., but especially when it pulls back into the underside of that level and it massively sells off. That would’ve looked very, very like the market was going to follow through because it’s a break pullback. That’s a trade that a lot of traders will take.
No sooner have they gone short, they’re being nailed on the wrong side of that trade. So, now that market short is offside. The odds favor being long this trade at the moment. So, looking at it from a daily perspective, you could certainly look to trade this pretty shortly. But if you want to drop down and see if you can day trade it, we do have a very similar situation actually on the lower down. There’s what I call a structure failure trap. And if we look at this area here and it breaks down through that level and some very eager beavers who were keen to get on that early morning break, the pullback, the retracement traders in there have been creamed.
So, a decent depth to a pullback into this area would be nice to go long and just make sure that you get something that looks like a failure in the retracement. You don’t just want to take that trade. Let me just highlight this. So, we’re going to get some type of pullback like that. Don’t just go long because you get this positive trade. Let it fail and then trap more people like that. That’s how you want to jump onboard essentially in this area. Just give me one second. Just going to change this color. In here. So, it’s actually trapping anyone who goes short and then you can get on that move up.
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