TRADING BASED ON A BOUNCE FROM A ZONE 

TRADING BASED ON A BOUNCE FROM A ZONE 

Bounce trading focuses on utilising price reversals that occur at support levels (support – bottom) or resistance levels (resistance – ceiling). 

How does the Bounce strategy work? 

The core principle of this strategy is that if a price has repeatedly risen or fallen to a certain level (support/resistance) and then bounced back, there’s a high probability that it will do the same in the future when it reaches that level again. 

 

Tools for identifying Support and Resistance levels

1.     Trendlines

A trendline is a diagonal line drawn by connecting two or more price highs or lows. 

- In an uptrend, it highlights future support levels. 

- In a downtrend, it indicates potential resistance. 

TRADING BASED ON A BOUNCE FROM A ZONE 2

2.     Fibonacci Retracement

Fib retracement helps traders identify likely support and resistance zones where price pullbacks may occur. 

3.     Chart Patterns

Patterns (or formations) like double tops/bottoms or the head and shoulders formation can hint atl possible market reversals. 

TRADING BASED ON A BOUNCE FROM A ZONE 2

How to trade Bounce in different market conditions

1.     Trending Market:

- Focus on pullbacks within the trend. 

- Use Fib retracement to identify key support & resistance levels. 

- Draw trendlines to pinpoint optimal entry zones. 

 

2.     Consolidating Market:

- Wait for a breakout from the consolidation range. 

- Identify support and resistance within the range and trade accordingly. 

- Enter trades only after a clear breakout above resistance or below support.