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The trap we’re going to look at today is what I refer to as a structure failure trap, which occurred in this area here. Traders at the hard right edge would’ve noticed this big, strong move up in price and then price pulls back into some confluence, because this area here had historically been resistance, so traders would believe therefore that this would now act as support.
It’s also the 61.8 percent Fibonacci. Price had made a new high. Higher lows. So, this looks like a great place to be a buyer, and indeed traders did go along in here, because of this confirming price action, which I refer to as entry cheese. This is the final part of the puzzle that convinces the trader in that their analysis was correct, so it’s time to take some risk. And as the price heads up, this assures them that they made the right move.
However, no sooner has that occurred, prices are now breaking below that level. So, if we get a retracement here, this looks like a good place to get short.
Disclaimer:
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