Candlesticks For Support And Resistance (5)

MINIMIZING THE RISKS
I find it useful to use other techniques. For one, there's John Bollinger's band width indicator (BWI) as a guide. This is the first signal that the trend is petering out, and that at this point countertrend trades I am suggesting? Wait until the momentum starts to decrease. If the market you are planning to trade is in the middle of a strong trend, going against that action is probably one of the quickest ways to lose money. Wait until the momentum starts to ease; this will reduce your chances of getting caught on the wrong side of a weakening trend; I want to jump in when the slope of the longer-term picture. Happily, there are ways to lose money. There is no way around the risks as much as possible by using the tools available.

A REAL-LIFE EXAMPLE
There are two noticeable exceptions, however. Time after time, an attentive trader could have entered positions counter to the prevailing market action and would have done well. You can see how many times prices either approached or penetrated real-body support and resistance points but were unable to sustain those levels. Figure 3, which shows the sterling/Deutschemark cross-rate, contains several excellent examples.