I posted details of a buy set up in copper when it was testing triangle support back on 19 November.
It’s taken a while but, the red metal last night arrived at the resistance line on the upper side of the triangle. It’s positioned for a possible break to higher levels so I thought a follow up post was in order.
The chart below shows how things stood back on 19 November.
The strategy discussed in that post was to buy on the first close above the high of the candle testing the triangle support and placing a sell stop behind the triangle trend line. The triangle resistance was discussed as a profit objective.
This strategy was triggered and would have seen entry at around 353.0
Buying the triangle break
As things currently stand, a common approach would be to buy on a break above the triangle resistance. Typically, traders may allow a bit of leeway, waiting for price to clear the resistance by a margin to reduce the risk of false breaks.
One approach to profit objectives on a triangle breakout is to project the height of the triangle from the point at which the resistance is broken. Using the Fibonacci Price tool to do this sees a measuring target of around 450 shown on the weekly chart below.
Running the original trade
Traders who bought off the support might typically stay with it instead of taking profit at the resistance level. This uses the original set up as a potential early entry on the triangle break.
Rejecting the resistance level now by forming a peak at the trend line or just above rather than breaking through would be a sign of weakness. Traders sticking with the position would typically move their stop higher to defend against this possibility
This could be achieved by moving the stop behind just below yesterday’s close. If price moves just above the trend line without a conclusive break the stop could be moved up next day behind the candle breaking through.
This approach locks in a modest profit while leaving the position intact for a more aggressive profit if the trend continues. It’s shown on the chart below
The dynamic stop trigger show on the weekly chart involves moving the stop up behind the first candle to hit 61.8% of the distance to the measuring target since this can be a common failure point.