Greetings my fellow traders, today we'll be talking about a set-up which I find, is often underused. A simple yet effective set-up that gives you extra confluences on your trend reversal trades - Quasimodo.
There are different kinds of Quasimodo entries that a trader can engage in, but today, we'll be talking about the trend reversal variation.
Structure movement : Price is trending, making higher highs and higher lows, before breaking structure to the downside after Peak is formed. We then have a Quasimodo line, defined as the last higher high before the Peak, which signals a possible trend reversal.
Entry : Set-up is commonly known to be entered directly at the QML line, placing stop losses right above the peak. But what I have found, in which I have back-tested and deem optimal, is to also look for possible entries in the whole DP(Decision Point) area as marked in the chart. There is a possibility price could present a stronger supply zone to enter from in the form of Drop base drops(DBD), or other formations like Wyckoff in lower timeframes, etc. The main point is to look for the ORIGIN of the move that supplied the downward move, causing the Break of Structure(BOS). Doing this makes yourself less vulnerable to liquidity grabs/stop-hunts, while greatly increasing your R:R.
Points to note : Stop losses should always be set at the Peak or a few pips above maximum as set-up is invalidated once Peak is broken. : Set-up applies to ALL timeframes. : Set-up is also invalidated if price breaks below MAJOR STRUCTURE after BOS.
That's all from me today, a little quick-guide to share. If you're interested in the other variations of Quasimodo set-ups, do let me know and show your support, I'll be happy to start a series of quick-guides for Quasimodo set-ups. Like to support, comment/dm me if you have any questions! As always, stay safe.