My FIB Method (Part 5) Lower TF entries in reversal zones
BTCUSD is offering a good example of how I like to trade pull backs of a strongly trending stock or instrument.
1. Identify a high probability area for a reversal.
2. Look for a lower time frame reversal pattern.
3. Wait for the trade to trigger then enter.
4. Take take profits at key FIB levels (236/382/618) if price moves in the expected direction
An ideal trade will give me short term profits which I use to pay for the risk of my longer term holds.
If the trade fails I will move on to the next trade using the exact same process. Lets we what happens in this case.
NOTE: I separate every price leg into 3 zones (BEAR/NEUTRAL/BULL). Until price is able to break back through the BEAR & NEUTRAL zones to the BULL zone it is at higher risk of continuing the near term trend. However, once price breaks into the BULL zone above the 618 the odds start to favour a re-test of the high and a potential breakout. Because of this I always take profits on the initial bounce and only add back if price is above the 618.
Make sure to check out my previous FIB Method posts (parts 1-4) to get an understanding of the way I use Fibs to define trend, identify high probability entries & manage risk.
1. Identify a high probability area for a reversal.
2. Look for a lower time frame reversal pattern.
3. Wait for the trade to trigger then enter.
4. Take take profits at key FIB levels (236/382/618) if price moves in the expected direction
An ideal trade will give me short term profits which I use to pay for the risk of my longer term holds.
If the trade fails I will move on to the next trade using the exact same process. Lets we what happens in this case.
NOTE: I separate every price leg into 3 zones (BEAR/NEUTRAL/BULL). Until price is able to break back through the BEAR & NEUTRAL zones to the BULL zone it is at higher risk of continuing the near term trend. However, once price breaks into the BULL zone above the 618 the odds start to favour a re-test of the high and a potential breakout. Because of this I always take profits on the initial bounce and only add back if price is above the 618.
Make sure to check out my previous FIB Method posts (parts 1-4) to get an understanding of the way I use Fibs to define trend, identify high probability entries & manage risk.
Comment:
Read below for updates to the trade. I posted in the wrong area.
