Setups
Consolidation Breakouts (Reverse for Shorts)
- 20/50 cross should have happened.
- Price should be above 20MA on the Daily Charts
- Price above 20 MA on 5 min.
- Stochastics should show bullish divergence
- Buy the BO
- Buy retracement BO (Flag, or pennant BO) based on candle patterns.
- Stop below previous higher low, or below consolidation zone, or whatever support that makes sense.
- Target at Flag’s measured move, or Pivot point R1/R2, or Fib retrace, or next major resistance.
- If rally is strong, preferably sell half position, instead of full. Use the next 2 steps for exiting the remaining.
- Before a valid TL can form (2 consecutive higher highs & higher lows), use Darvas boxes to trail the stop-losses.
- Then draw the TL, use it as support. Stop will go under it.
Trendline touches
- After 2 higher highs & higher lows, connect the low to form a T/L.
- This should be a setup starting at the beginning of the day, i.e. it should have formed over the last
- day or 2.
- If MACD is making higher highs, & trend looks strong (big white candles, strong vol), buy the TL touch & bounce,
- using candle patterns
- Target is the touch of the upper TL.
- Stop below a support zone, below the TL.
Trendline reversal
- Price makes Higher high, & a higher low.
- Price takes out the higher high, and retraces.
- Buy the retrace, using candle reversal pattern, near support.
- Check to see if the 20/50 cross has also happened.
- At this point, price will most probably be in the TAZ.
- Stop below the new higher Low.
- Target – Next logical resistance.
Major Candle Pivot Patterns
- Hammers, Dojis, Dragonfly, Harami & Engulfing candle after a downtrend.
- Bottoming tails are a sign of strength
- Topping tails, near a new high, mean sellers are getting stronger, & the trend might end.
Price Target Determination
As you decide on a price target, consider the following…
- Possible Support or Resistance Areas That Prices Could Trade To
- The Average Move of Recent Price Swings
- The Underlying Trend and How Strong/Weak it is
- Suggested Target Prices From Applicable Price Patterns
