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Support and Resistance Homework

Rounded Tops and Bottoms - Part One

Many of you know that rounded tops and bottoms are among my favourite trading formations. People get confused about identifying the all important neckline however. The neckline of the formation is where you decide to place you entry order looking for either a breakout or a bounce, whatever the case may be.

Sugar is a market that loves making rounded tops and bottoms. Looking at the recent weekly sugar chart you can see at least two obvious rounded tops and bottoms in sugars recent history.

Your mission (should you choose to accept it) is to draw in the two necklines, one for a rounded top and the other for a rounded bottom which are already on the sugar chart.

Secondly, if I told you sugar was likely to make another rounded bottom formation in the future, where would you plan the neckline to be? Why there?

Go to the Answer

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