In this short trade there were 2 major errors:
1) There was a nearby Major Demand signal. Even though a down trendline is nearby, with significant demand behind, there is a high probability that it’ll break, or that a significant rally is to happen, hitting the stoploss. In this case there was a demand signal which prevent further losses, but as you can see the price then rallied significantly.
2) The background was blue (strong) at the time – it analyzes the supply/demand signals and trend, so a strong background means the conditions are right for a trend change, not a downtrend continuation.
1. Strong background. Another alternative, since there was a resistance break-out, is if there were strong demand/major demand signals before the break-out.
2. Enter in a bar with low volume. There were also other previous valid bars.
3. Closed on trailing stop. Trailing stop is a must for intraday trading, where whipsaws are the rule.
