Retest back into a fresh supply zone ahead, possible retracement, a short opportunity.
Stuff to remember:
— First look for significant move, then follow it to its origins where you might find a suitable level to evaluate further
— Make sure the initial move is significant on the same timeframe as the one you use for viewing your candidate level most clearly
— Check the distance that price traveled before the trend ended, longer distances mean larger initial imbalances and improved probabilities in the future
— The strong initial move can contain a few small retracements but not so many that make this move slow and weak
— Avoid opposing levels on the same and immediately higher timeframes, prefer to have a clear road ahead for your trade to run
— Make sure your level is placed correctly (low for Demand, high for Supply) in relation to the big picture's important tops and bottoms
— Trading the first return of price to a valid "fresh" level carries the highest probabilities due to the larger imbalance
— A valid level is considered "fresh" if price has not returned to it since its creation. It has nothing to do with how old the level is
— Trading only the first return of price to a valid, properly evaluated level can greatly increase your win ratio. Trading second or other subsequent returns will only dilute your trading edge.
Trade closed: target reached
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Comments
Casey_Yeo
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hi, do you use limit orders in the zone or wait for certain patterns before entering your orders?
tradewonk
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@Casey_Yeo, I prefer to set my an alert on theese zone's instead of limit order, in fact that sometimes, it trigger because of a big news that can break through easily, in that case i prefer maybe not taking the trade. Just by looking at the candle you can see if it's a big news. And also if it trigger on friday afternoon, i also don't take the trade.
Casey_Yeo
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@tradewonk, when alerted do you go down to LTF to look for reversal patterns before taking the trade? or any other consideration? Thanks.
tradewonk
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@Casey_Yeo, No, they are useless, and your RR will decrease. Just be sure the if you trading H4 demand zone, that it's not a supply zone on Daily, and that it should be a fresh zone, and it's not triggered because of a major news. As you can see on this trade, It have made a quite big retracement few pips before entry price, and then came back again to entry price, so it's actually not 100% fresh zone but i still believe in it, because we are in are quite strong daily supply zone also. The first retracement, was an excellent fresh supply zone trade. I just draw my zone too small.