Monthly Archives: October 2012

More… Anticipating Traps

In last week's newsletter we looked at a more enlightened way to use TA – anticipating and exploiting traps within the marketplace. Here's the link if you missed it:

 

Today, let's look at another example of the concept discussed in this earlier article.

anticipating traps

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The Double Failure Pattern (Revisited)

When I identify a setup area based upon the structure of the market, one thing I absolutely love to see is a double failure pattern.

The double failure pattern was discussed in a prior article (http://yourtradingcoach.com/trading-process-and-strategy/the-double-failure-pattern/) and involves two failed attempts to breach a significant structural area of the chart. Entry is on the failure of the second attempt.

A second failure to do anything is often a good indication the market will do the opposite.

Here are two rather different trades from the past week, both of which trigger into the trade through a double failure pattern on their lower timeframe chart.

double failure pattern

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Lower Timeframe 3-Swing Retrace Entry

Lets look at a couple of recent trades which contain a single common element.

The following two trades are both an entry into the first pullback following a strong bearish price swing. The common element in both is the way that I waited for a three-swing lower timeframe retrace. Just like the complex pullback on our trading timeframe provides a nice source of trap orderflow for continuation trade, the same concept can be used on the lower timeframe to trigger into a single leg trading timeframe setup.

This is by far my preferred way of entering on the first pullback after a strong move… waiting for a lower-timeframe pattern based entry to stop me into the trade.

3 swing retrace entry

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