On the 4hr chart, I’ve boxed out the day for the candle that caused the change and placed some entry targets for a possible retrace to enter.
Again, as I noted at the end of the last article, the Wilder strategy would call for the sell to be placed at or below the extreme of the day of the change. However, this does open up the trade to more risk. By tracking the day and subsequent action on the 4 hr chart, it’s possible to reduce the risk by placing a stop order in the 25-75% range with a stop just above the high of the day.
In this case, it would have worked however, there are cases which I’ll review next where the trade would have been missed.
Technically, I guess you could create two orders to cover both the continued breakout to the upside with a stop order and a limit order for the pullback with OCO when filled.
If you wish to just look at the daily and 4hr chart, this might be a strategy to explore going forward. However, If you want to manage risk, buying at the top of a candle that caused the swap could be too much and in these cases (where there is no pullback, you just miss the trade).
However, I’m also exploring this setup on the weekly/daily chart combo and if you look at ngas weekly against daily, then the setup would have worked. Though with weekly, it takes longer to materialize and may not be any more beneficial in managing risk.