You can fade the breakout with a limit order back in the neckline and just put your stop above the high of the fake out candle. You could place your target a little below the high of the second shoulder or a little above the low of the second shoulder of the inverse pattern.
I read the above in the babypips forex course. It is very confusing to me.
- When you say limit order, do you mean Buy Limit or Buy Stop to fade the breakout?
- If I am fading the Head and Shoulder breakout (or trading the false breakout), I should initiate a buy trade. How is it possible to place my stop above the high of the fake out candle? I am thinking that if I place the stop above the high of the breakout candle, then I am selling instead of buying. Thank you.