Line rebounding strategy
This is a pattern that tries to catch the moment in which the price is unable to move through the support/resistance, in which the price cannot break out of these levels.
It is believed among traders that the uptrend is over the moment the price touches the resistance level and the first candle closes beneath the line. They will open short positions then.
The same applies to the opposite situation when there is a downtrend on the market. When the price hits the support and the first candle closes above it, it is a signal to go long.
Rebound line strategy in other cases
The line rebounding strategy validity does not end with horizontal lines like support and resistance. Just take a look at the picture below and you will notice, it also works with the diagonal lines which you can draw along the trend.
If you need further information about support/resistance, I encourage you to read the articles about combining trendline with support/resistance and about trading RSI with support/resistance.
Good luck!
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