China's weekend monetary easing has given us a firm start to trading on the Australian market this week. The Bollinger Band set up I posted on Friday has been triggered so I thought a post outlining an approach to trading strategy may be of interest to readers following it.
The entry set up was confirmed by a move above, the high of the candle making the 2nd trough. This resulted in the “W” type formation with the 2nd trend trough above the lower Bollinger Band as I discussed in Friday’s post.
An initial stop up would typically be placed just behind the recent low representing the first point of failure. One approach to stop management would be to move it up behind any new corrective trend troughs.
The initial profit objective shown below is set at the resistance of the 200 day moving average which also intersects at the green trend line. These are both shown on the daily chart below.
If there is a chance to move the stop under this strategy, I’ll post an update as well as thoughts on extended profit objectives if we get that far.