Now it’s time to learn how to trade a short position in the market using a support and resistance scalping strategy. To do this, we start by identifying a price chart where the price is trading near a resistance level. When this happens, we should wait for the Bollinger Bands to start contracting. But this may not be the case all the time. At the same time, you will also notice that the Fibonacci levels start drawing automatically.
When you see this setup forming, you need to look for a bearish candlestick pattern forming near this resistance level. When you see a reversal pattern like a bearish engulfing or a resistance level being broken, you can then initiate a sell position in the market.
When you enter a sell trade, set your stop loss at the top, just above the resistance level. This will ensure that your stop loss points are tight and when the stop loss is reached, it is because the price is likely to reverse direction.
To take profits, you can make use of the Fibonacci indicator that plots the levels for you. You can use the 1.618% Fibonacci extension as a potential take profit level. It is also best to see the confluence of a Fibonacci level with a support level on the price chart as well.