medium · Volume Price Analysis support-resistance
A currency pair rallies to a known resistance level. The breakout candle is wide-spread and closes 20 pips above the level, but the tick volume is only 40% of the 20-bar average.
What is the appropriate trade action?
- Enter long immediately, placing a protective stop below the breakout candle low to ride the move.
- Enter short immediately, since a low-volume breakout above resistance is essentially a guaranteed reversal signal.
- Stand aside and wait for the next candle; this is likely a 'trap up' move on low institutional participation.
- Place a buy-stop order 10 pips above the breakout high to confirm trend continuation once institutional volume improves.
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