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CounterTrend Traders

Although it goes against human nature, and isn’t necessarily the most popular approach, I believe the most efficient means of technical analysis might be in relation to countertrend trading. In other words, rather than using tools and indicators to identify a trend and go with it, traders might be better off determining overextended market conditions and trading against the tide. If the goal is to buy low and sell high (which it should be), being bullish near technical support and bearish near resistance should offer the best odds of success. This theory could be even more valid in markets such as the currencies, which typically trade within long-term ranges, as opposed to perpetual bull and bear markets, although there can certainly be relentless intermediate-term trends.
Peter Lynch once had the following to say about trading in the stock market: “The one principle that applies to nearly all these so-called ‘technical approaches’ is that one should buy because a stock, or the market, has gone up, and one should sell because it has declined. This is the exact opposite of sound business sense everywhereelse, and it is most unlikely that it can lead to lasting success in WallStreet. In our own stock-market experience and observation, extendingover 50 years, we have not known a single person who has consistently,or lastingly, made money by thus ‘following the market.’ We do not hesitate to declare that this approach is as fallacious as it is popular.”

CounterTrend Traders (Support and Resistance)
Support and resistance represent the price at which supply and demand meet. Specifically, support is the level traders feel demand (buyers) will increase enough to prevent further declines. Resistance is the area traders believe supply (sellers) will increase to prevent further price gains.
CounterTrend Traders
CounterTrend Traders
CounterTrend Traders Reviewed by learn forex trading on November 30, 2014 Rating: 5

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