Here we are looking at a signature chart by Trading Central. There may be indicators, patterns or trend lines plotted on the price chart. This gives you a glimpse into the technical analysis methodology, but let’s focus on the output.
The bold blue arrow gives an immediate and clear sense of direction. In this case, the anticipated scenario is that the price may rise.
The anticipated scenario is only the preference as long as the price remains above this blue pivot line. If the price crosses the pivot line, the alternative scenario kicks in and prices are expected to go in the other direction.
Stops help you preserve capital: Our trading customers often use this pivot level as a stop price to protect their position. Hitting this stop means the reason for being in the position no longer exists, so they close their position.
Now, stops are important but let’s also plan to exit with a profit! For this rising price situation, we offer two resistance levels to use as targets. A typical approach is to close half the position at the first target to lock in some profit, and close the other half of the position at the second target level.