In bearish markets, prices do not move in a straight line, but often experience temporary bounces (corrections) before continuing to decline. The Pullback strategy allows you to enter sell trades at ideal points to maximize profits.
🔍 Conditions for Applying the Strategy:
1️⃣ Clear Downtrend:
· Ensure that the market is in a downtrend (Lower Highs + Lower Lows).
· Use the upper trend line (resistance) and the lower support line to define the downward channel.
2️⃣ Potential Resistance Areas:
· The correction may be towards the upper resistance line of the channel.
· Or towards a previous support area that turned into resistance after the breakout (the pink arrow in the chart).
3️⃣ Sell Entry Signals:
· A strong bearish candle appears (like an Engulfing Candle or Bearish Pinbar) at resistance.
· Confirmation from momentum indicators (like RSI above 70 then reversal).
⚡ How to Execute the Trade?
✔ Entry: After the price reaches the resistance area and a sell signal appears.
✔ Stop Loss: Above the last peak in the correction.
✔ Take Profit: At the next support or the lower channel line.
📌 Example Illustration:
· The price is in a downtrend, bouncing upward towards the resistance line or a previous support breakout area.
· At resistance, a bearish candle appears with a decrease in trading volume → Sell signal.
· Exit when reaching the next support or breaking the lower channel.
🎯 Why Does This Strategy Work?
· Large traders exploit corrections to increase sell positions.
· High liquidity at resistances makes reversal more likely.
