Here’s a trade on the GBPUSD that I tweeted live on Twitter this morning. It was a classic Bull trap into supply and netted me 53 pips.
So what happened? Well… breakout traders got tempted long on the break of the prior swing high (blue line). At the same time, traders who were short from that prior swing got stopped out. Price hit supply and promptly reversed. I went short as we ducked back beneath the fakeout area and breakout traders covered their positions. It’s a classic setup that repeats over and over again.
As my bias was short, I wasn’t too bothered about the first demand “roadbump”. The 2nd demand area looked more probable for a bounce and as I had to leave my desk, I set that as a conservative target. The actual entry and exit are indicated by the pink and blue arrows.
I hope you found this article informative. Have a great trading week!