Second Trade of the Day – Break of Support and Reverse on the DOW
Today I got into a couple of nice setups, very clean trading day. I like it when this happens, makes it very easy to trade. This was my second trade today, this time on the DOW. If you look at the longer timeframe charts you can see that the DOW is in an uptrend.. this means that I’m looking for long trades.. areas where I can buy cheap!
Anyway, I was watching the DOW as below and drew a support line as the market was creeping upwards. Higher highs and higher lows though you can see that the higher lows were making more progress than the highs. This says to me that there are more buyers than sellers.
The break of support is where a lof of breakout trades would have gone short and also something that professional traders are aware of.. they know that there will be many retail traders here. A move then higher back above the support line means that those who have just gone short have to cover their positions and also with professional traders most likely buying here, the price shoots up.
I had a take profit level at the resistance line and took it when the market seemed to dwindle just below this level for 35 points.
On a sidenote, people have asked me what broker platforms I use. I use two, ETX Capital and Igindex… they are pretty good in my opinion! It’s also a spreadbetting platform which is Tax free in the UK. You can read more about Spreadbetting on Wikipedia : http://en.wikipedia.org/wiki/Spread_betting
