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Back to Back Opposite Trades

Supply and Demand Back to Back Opposite Screenshot

This is a beautiful example of two opposite trades back to back.

Reading the Market​

As always, there are clear support and resistance levels. Looking carefully, up until the far left where price breaks and closes below the support level, there is very choppy movement. In fact, this is a ranging market. But there are still clear support and resistance levels.

It's hard to say who's really in control because there is no clear power or momentum from either side. They are both weakly playing ping pong with no sign of a clear winner.

So in this case, the approach is to trade off the rejections of the levels, with no further confluence of momentum.

Trade 1: The Buy​

But this example shows something important. Zones of indecision will not always be one simple, clean doji candle. Sometimes they will be messy and unclear, especially in markets such as this.

But it's there. It's that first retracement from the extension off the support level.

The setup:

  • Entry: Right at the tip of the indecision zone
  • Stop loss: Barely below the bottom of the same zone
  • Take profit: Targeting the opposite resistance level

Clean. Winning trade.

Trade 2: The Sell​

Then price is back at the resistance level and now sellers are in control (barely).

There are multiple attempts to push beyond the level, as expected, but a failure to do so - printing a head and shoulders pattern.

What does this mean?

  • Failure from buyers
  • Strength from sellers
  • Which ultimately means a reversal

So the trade is a sell.

There's the final rejection off the resistance level, with a moderately strong push, leaving the familiar doji candle there. Price pushes away, trickles back in.

The setup:

  • Entry: At the indecision zone
  • Stop loss: Above the zone
  • Take profit: The opposite level of support this time

Price wicks into the entry and hits the take profit.

Key Takeaway​

This example shows that a strong trending market isn't needed to find valid setups. Even in ranging, choppy conditions, if there are clear support and resistance levels, the rejections from both sides can be traded.