Double top or Flat?
Updated
I have noticed when price action gives me a set up like this that one of three things usually happens if price action retraces close to the original retracement.
1) It bounces back up to test the previous highs
2) It blows through and creates a double top
3) It bounces 1/2 way back and then disrespects the zone.
I like to wait for a close in the zone and then set my entry at the upper zone line. If price actions continues through my zone, no harm no foul. Look for a shorting of the double top. If it bounces back up it is a nice tight zone and you can get a 4:1 return below the previous highs. I move to break even when it gets to 1/2 way back.
If you like the idea play with it a bit and see what you can find.
1) It bounces back up to test the previous highs
2) It blows through and creates a double top
3) It bounces 1/2 way back and then disrespects the zone.
I like to wait for a close in the zone and then set my entry at the upper zone line. If price actions continues through my zone, no harm no foul. Look for a shorting of the double top. If it bounces back up it is a nice tight zone and you can get a 4:1 return below the previous highs. I move to break even when it gets to 1/2 way back.
If you like the idea play with it a bit and see what you can find.
Note
Zone hit overnight and showed no signs of reversing. So the first long strategy did not happen. Now look for a solid close below the zone and bearish signs of a double top.
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