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Thomas Long, Course Instructor

euraud 041310

We can see where a trendline using the previous two highs offered strong resistance in this third test. This is where traders who use this approach will open a sell position. The advantage of this style of trading is that your risk is fairly small and the potential reward is good since you would be opening a new position near the beginning of the next move down instead of later in the move. That is of course if there is a reversal, but with an excellent risk:reward ratio, this style of trading is both popular and proven to be solid.

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