The trap we’re going to look at today’s trapped traders’ analysis is what I refer to as a trap break pullback, which occurred in this area on the chart here. Traders would’ve been looking to trade off this level because it had been historical support, resistance on several occasions, and it indeed looked like it was going to sell off again at the hard right edge, drawing those traders in because they had believed that it was going to do exactly what it had done historically every time it reached this level.
And indeed it did sell off, and that’s that confirming price action, that entry cheese that gets them to commit and take some risk. But clearly no sooner had they entered those trades, the market went strongly against them, and it was also based on the fact that US non-farm payroll data was awful, so this adds weight to the fact that traders would’ve got this completely wrong, and they are trapped in here, losing a lot of money.
So, if we get a pull back into around this location here, and the stock market is rising, this looks like a pretty good place to get long.
Source: Forex Traders Daily
José Ricaurte Jaén is a professional trader and Guest Editor / community manager for tradersdna and its forum. With a Project Management Certification from FSU – Panama, José develops regularly in-house automated strategies for active traders and “know how” practices to maximize algo-trading opportunities. José’s background experience is in trading and investing, international management, marketing / communications, web, publishing and content working in initiatives with financial companies and non-profit organizations.
He has been working as senior Sales Trader of Guardian Trust FX, where he creates and manages multiple trading strategies for private and institutional investors. He worked also with FXStreet, FXDD Malta, ILQ, Saxo Bank, Markets.com and AVA FX as money manager and introducing broker.
Recently José Ricaurte has been creating, and co-managing a new trading academy in #LATAM.
During 2008 and 2012, he managed web / online marketing global plan of action for broker dealers in Panama. He created unique content and trading ideas for regional newspaper like Capital Financiero (Panamá), La República (Costa Rica), Sala de Inversión América (Latinoamérica) and co-developed financial TV segments with Capital TV.
He is a guest lecturer at Universidad Latina and Universidad Interamericana de Panamá an active speaker in conferences and other educational events and workshops in the region. José Ricaurte worked and collaborated with people such as Dustin Pass, Tom Flora, Orion Trust Services (Belize) and Principia Financial Group.