Ragav27

BREAKOUT or FAKEOUT ? How to find out and initiate a trade ?

Long
NSE:CDSL   CENTRAL DEPOSITORY
In this post we will see how to initiate a trade in a dilemmatic sitiuation,i.e.,a small green doji type candle coming out of the falling wedge pattern,which leads to the confusion whether to take a trade or not.We would be in dilemma whether it is a breakout or a fakeout? Whether to initiate a trade now or to wait ? In such a situation taking help of a indicator would help you.I have took the help of 20 EMA ( Exponential Moving Average ) here.

As you can see with the help of 20 EMA we have found that there is price rejection at the 20 EMA for the past few trading sessions.
So, as marked in the chart initiating a trade only after breaking and closing above the 20 EMA as well as above the red resistive trend line would be viable for a successful trade and to attain and book profits at the mentioned targets in the chart as marked.

Trade active: I have entered the trade at 1247 as we dicussed earlier.The price crossed the 20 EMA as well as the red resistive line with above average volume.My stop loss would be 1170 with the targets as mentioned earlier in the post .Enter the trade only if it falling as per your setup with proper risk and reward management.Thank you.
Trade closed: target reached: First target reached and I have booked my profits at 1400.
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