After analyzing what the strategy of double zero, today it is her turn to another strategy manual for trading Forex, which, all told, particularly I have him a remarkable confidence, because their success rates are usually nothing contemptible.
This is the strategy flysheet or double floor, according to the preceding trend that is being developed in the price. The name of the strategy is so descriptive that further explanation is not necessary: this strategy is when the price marks two consecutive maximal or two minimal at the same level.
The psychological background of double ceilings and double floors
The proper functioning of this strategy is probably due to psychological background that hides behind its formation. While the double zeros may be somewhat more “esoteric” double ceiling / floor throws a very clear message market sentiment: there is not enough purchasing power / selling for that price again exceed last maximum / minimum marking, and that’s always a sign of trend exhaustion.
As is well known, the trend price movement is never done in a straight line, but the price will oscillate in what are called impulses and setbacks, but with the difference that in a stable trend each new price momentum exceeds the maximum or at least marked by the previous pulse. That is why when an impulsive movement stagnates in the same maximum or minimum that marked the previous pulse, jump all alarms that indicate that this trend may be losing strength and therefore coming to an end.
Double top or double bottom: Corrective movement in sight
It is not strictly necessary that new maximum or minimum coincide exactly with the previous one. There is always a margin of error to consider that the price has marked a double bottom or double top, but you’d be surprised how many times the price trend exhausts it’s just pip maximum or minimum earlier.
You may also like to read another article on Tradenligne: Forex Trading: Strategy double zero
When that happens, the signal must capture the market is changing trend, or at least a corrective movement, so you have to be very attentive to the time when the price confirm the situation of rotation and able to take advantage the corrective movement to the main trend which until then had the price.
Generally, it considered the turning confirmed when the price crosses the point where the final push that ended stagnating in the new maximum / minimum that completed the double ceiling / floor began. The minimum objective of the operation with this strategy is usually the same distance that exists from that point to the area of the double ceiling / floor.