Warning Signs- Long Bars Review

  I warn of long bars near the completion of a pattern in nearly every trade I put on fx360.com. The reason for this is that they are the number one signal that a pattern is likely to fail. Of course, some patterns are going to fail and some patterns are going to win. There is nothing anyone can do about that, and no one wins them all. However, long bars are the number one red flag that indicates we should not take a trade when utilizing our geometric pattern recognition that we use on fx360.com

Geometric pattern recognition is a methodology that attempts to find points of significant support or resistance. In other words, we are looking for a reversal in price action. If the price is falling, we are looking for it to begin to rise at the point we suggesting going long. If the price is rising, we are looking for it it to fall at the point we suggesting going short.

Since we are looking for reversals, we want to enter our trades with as little momentum as possible. The more momentum a currency pair has, the more force it requires to reverse. Long bars are simply an indication that there is a lot of momentum or force that will have to be reversed at the entry point. In turn, long bars near the entry of the trade decrease the probability that the trade will reverse as the pattern suggests.

Full Story - FX360