1) try and identify support and resistance levels
2) look for positive/negative closes to follow through the next day (as we believe this will hold true approx 70% of the time)
3) watch for divergence
4) Look for D chart higher lows/lower highs, double tops/bottoms, engulfing candles, hammers/shooting stars, morning/evening star patterns
5) rsi crossing its moving average or crossing the 50 line
If we are confident that a confluence of the above exists then the next day we will look to trade in 1 direction only. This keeps us out of some head fake moves typically around London open and the US open (weak counter trend 1hr candles in and around US open just as big a fake move as LO).
From there we are looking for good 1hr set up candles and the 5 min higher low/lower high that follows for entry.
There are some days where we will consider buying or selling but the most success follows everything lining up on D chart to trade in 1 direction.
The attached chart shows some areas we have identified as possible SR levels. Some examples:
The first chart shows GU with SR levels identified.
4 morning/evening star patterns. The days following these patterns we would be trading 1 direction only.
Double bottoms and higher lows would see us buying only on the days following these positive closes.
Once we have our view from D chart then its a matter of waiting for 1hr to give a good signal candle and then 5 min hl/lh.
No comments:
Post a Comment