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Thread: Trading strategy for 2B pattern

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    Default Trading strategy for 2B pattern

    The 2B pattern is also called a "spring", it resembles a small letter M or W on the chart and signals a possible reversal of an upward or downward price trend as soon as the market stops forming new, much higher highs or lows.

    For the first time, the 2B pattern (an excellent and very strong reversal trading technique) was described in the book by Victor Sperandeo (he was then known as Trader Vic among traders) Speculating Professionally. Trader Vic described this excellent technique as follows: In an uptrend, if the market price touched the previous price high, but failed to cross it the first time, and immediately fell below the previous price high, this indicates that the market trend is -that will make a U-turn. " The opposite is true for a downtrend as well.

    The rules of pattern 2B are applied as soon as the price in the market forms a new high or low, and after that a tangible pullback. After the rollback, the price again tries to test the formed price maximum or minimum. As soon as this testing of a new high or low is unsuccessful, it is a signal of a potential reversal of the previous price trend. This setup is powerful enough and signals the trader about the beginning of a correction in the market.

    2B patterns can be found on intraday setups and is quite useful for making deals within the day by finding trending tops and bottoms. Forex traders can also use when analyzing 2 tops and 2 bottoms of the volume of transactions. If this volume at the second peak or day is less than at the first peak or day, then this tells him about divergence and the formation of a possible 2B formation.

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.

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