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The Sweater-Back

 

The sweater-back is a return on the old support or resistance to confirm an exit of channel of tendency, that can also be a crossing of support or horizontal resistance.

The exchange rates often evolve/move in channels of tendency which one will follow, but when the prices break the channel one often finds a sweater-back (flashback) on the old broken support and thus higher than the break.

 

For a break by the bottom of a channel bull one will often expect new higher to improve the bottom of the channel bull, the sweater-back become invalid if one makes a fence in the channel bull at the time of the return.

One sells as soon as the sweater-back is valid by a fall after the test.

 

 

For a break by the top of a channel bear one will often expect new low to improve the top of the channel bear, the sweater-back become invalid if one makes a fence in the channel bear at the time of the return.

One buys as soon as the sweater-back is valid by a rise after the test.

 

Following figure: The cup with handle