FACTS
1. The market TRENDS more than it BENDS/REVERSES.
2. Knowing targeted reversal points Helps for Reversal or Continuation Decisions.
3. If I miss a strong reversal I can always get in on a LOWER TIME FRAME REVERSAL or A REVERSAL REJECTION SETUP.
4. We will take trades Mainly on Daily Charts or according to the Daily Chart trend on lower timeframes such as H12, H4 and H1.
5. The market reverses a trend through a 'U-Turn' formation called a SWING HIGH or SWING LOW.
6. This system pre-emptively identifies the 'TARGET' reversal point to help us trade a REVERSE or CONTINUATION.
7. Five bars make up a Swing High or Swing Low.
8. At ALL times BAR#3 is the "peak" bar.
9. Scenarios #1 described below, are our ideal trade.
1. The market TRENDS more than it BENDS/REVERSES.
2. Knowing targeted reversal points Helps for Reversal or Continuation Decisions.
3. If I miss a strong reversal I can always get in on a LOWER TIME FRAME REVERSAL or A REVERSAL REJECTION SETUP.
4. We will take trades Mainly on Daily Charts or according to the Daily Chart trend on lower timeframes such as H12, H4 and H1.
5. The market reverses a trend through a 'U-Turn' formation called a SWING HIGH or SWING LOW.
6. This system pre-emptively identifies the 'TARGET' reversal point to help us trade a REVERSE or CONTINUATION.
7. Five bars make up a Swing High or Swing Low.
8. At ALL times BAR#3 is the "peak" bar.
9. Scenarios #1 described below, are our ideal trade.
PAIRS TRADED
EURUSD, NZDUSD, USDCAD, XAUUSD, USDJPY
NB: I also watch the US30 and the USDX to get confirmation on USDJPY direction, and general sentiment on the dollar. A good resource for more information
THE LONG(BUY) TRADE
BUY SCENARIO#1
1. Market is tending downwards (at least for 3 days). Downtrend - Creating lower highs and lower lows.
2. The LAST BAR (BAR#3) closes with two bars having higher lows on its LEFT
3. BAR#3 closes ABOVE the CLOSE PRICE OF BAR#1 (if BAR#1 has a BEARISH BODY) OR above the OPEN PRICE OF BAR#1 (if BAR#1 has a BULLISH BODY).
4. Open a BUY TRADE OR BUY LIMIT at BAR#1's OPEN (if BAR#1 has a bullish body) or at the CLOSE (if BAR#1 has a BEARISH BODY)
5. Stop should be placed at 50 pips or 15 pips below BAR#2's Low, whichever is greater. If BAR#1 has a lower low than BAR#2, we use BAR#1's Low - 15pips for our stop.
6. The average Take Profit is 100-200 PIPS. Swingers may hold longer.
7. Assess the Win Probability.
- The WIN probability is higher when BAR#3 closes ABOVE Both "the" BAR#1 & BAR#2 prices.
- The WIN probability is higher when BAR#3 closes ABOVE Both "the" BAR#1 & BAR#2 prices AND the BAR#1 and BAR#2 prices are close to or at the same level.
- The above is important because rejection of reversals are common at the BAR#1 PRICE
OTHER BUY SCENARIOS
These will occur when BAR#4 OR BAR #5 close ABOVE 'the' BAR#1 & BAR#2 Prices. The same rules apply for taking the trade as outlined in BUY Scenario#1
THE SHORT(SELL) TRADE
SELL SCENARIO#1
1. Market is tending upwards (at least for 3 days).Uptrend - Creating Higher highs and higher lows.
2. The LAST BAR (BAR#3) closes with two bars having lower high on its LEFT
3. BAR#3 closes below the CLOSE PRICE OF BAR#1 (if BAR#1 has a BULLISH BODY) OR below the OPEN PRICE OF BAR#1 (if BAR#1 has a BEARISH BODY).
4. Open a SELL TRADE OR SELL LIMIT at BAR#1's OPEN (if BAR#1 has a BEARISH BODY) or at the CLOSE (if BAR#1 has a BULLISH BODY)
5. Stop should be placed at 50 pips or 15 pips above BAR#2's high, whichever is greater. If BAR#1 has a higher high than BAR#2, we use BAR#1's High + 15pips for our stop.
5. The average Take Profit is 100-200 PIPS. Swingers may hold longer.
7. Assess the Win Probability.
- The WIN probability is higher when BAR#3 closes BELOW Both "the" BAR#1 & BAR#2 prices.
- The WIN probability is higher when BAR#3 closes BELOW Both "the" BAR#1 & BAR#2 prices AND the BAR#1 and BAR#2 prices are close to or at the same level.
- The above is important because rejection of reversals are common at the BAR#1 PRICE
OTHER SELL SCENARIOS
These will occur when BAR#4 OR BAR #5 close BELOW 'the' BAR#1 & BAR#2 Prices. The same rules apply for taking the trade as outlined in SELL Scenario#1
NOTES & TIPS
1. Keep Take Profit at 100 pips for counter trend setups.
2. If price is failing at bar #1's price, the trend will continue.
3. If you are in a short/sell trade and price keeps failing (not able to close below) at the close price of the Lowest Bearish Close Price of the Swing High Structure, the market could be looking to go bullish, protect your trade or take profits. Otherwise, stronger selling ahead.
5. If you are in a long/buy trade and price keeps failing (not able to close above) at the close price of the Highest Bullish Close Price of the Swing Low Structure, the market could be looking to go bearish, protect your trade or take profits. Otherwise, stronger buying ahead.
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creator simoneg