What does ‘rebound line strategy’ mean?
Rebound line strategy is a term in investing that refers to the technique of capturing the moment where the price is no longer able to break the support and resistance levels.
Support level refers to the area where the price is no longer falling, while resistance level indicates the area where price is no longer rising.
Once the price has already reached its resistance level and the first candlestick has also already closed below it, many traders believe that the best strategy would be to trade for a fall, since they think that the price upward dynamic has already ended.
Trends and rebound line strategy
The rebound line strategy can actually be also used for the opposite scenario. Say that the price has already reached its support level and the first candlestick has already closed above it. Traders who have faith in this strategy will then trade for a rise, since they believe that the price decrease dynamic has already stopped at this point.
This means that this strategy can be used for any kinds of trends, be it upward, downward, and even neutral.
If you’re interested in learning more about support and resistance trading strategies, you can check out some of our other articles here on investingstockonline.com. You can also read more about the cases where the price manages to break support or resistance levels.
Good luck on your trading journey here at Binomo!