One of my Favorite Setups

Don’t make things more complicated than they need to be. This setup is simple and it appears time and time again.

  • Sell a rally to resistance in a downtrend
  • Buy a fall into support in an uptrend

 

Here’s one recent downtrend example.

 

First, let’s look at the longer-term chart, above. This one is the five minute chart, but the concept applies to any timeframe (whatever you want to call longer-term). The important information on this chart is the trend, which is clearly down. To the left of point A we have a downtrend pullback, which interestingly forms a short-term ledge of support, shown by the horizontal line. The shooting star though shows evidence of higher resistance, leading to a breakout below the ledge two candles after the shooting star. Certainly you could take the entry on this break down – but that’s not the one I’m showing you today – the one we’re looking at is point A.

Point A shows a rally back to the previous swing high, or more specifically in this case the point of breakout at the lower range of the swing high.

Moving on to the 1 minute chart for a more refined look:

 

Exactly as described – price breaking below the area of short-term support (now resistance) and rallying back to the point of breakout, offering a low risk entry at point A in the direction of the larger timeframe trend.

The first target is the previous swing low (approx 20 pips), with any subsequent parts being trailed.

No indicators required.

Cheers,

Lance Beggs.


Written by

YourTradingCoach – Admin

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