ETHUSD 1H How to Profit from trading Pullbacks

Step #1: Identify a Bearish Trend which is characterized by a Series of Lower
Highs and Lower Lows
Identifying the direction of the trend should be a fairly easy process. The easiest method that
our team at Trading Strategy Guides likes to use to identify the trend is the swing low and high
structure. In essence, an downtrend is defined as a series of lower highs followed by a series of
lower lows
Note* It’s important to use the higher time frame to determine the trend regardless of the time
frame you normally base your trades on.
Step #2: Switch to the 1h Time Frame and Wait for a Pullback against the
downtrend
After successfully identifying the trend, we can switch lower to our preferred time frame. It can
literally be whatever time frame you feel more comfortable with but, for the purpose of this
pullback trading strategy, we use the 1h time frame.
Step #3: Place Your Fibonacci Retracement Indicator between the last swing
high and low levels, prior to the pullback.
Identify the most recent swing high and swing low and place your Fibonacci retracement
indicator between the two swings.
Step #4: Sell Anywhere Between the 50% and 61.8% Fibonacci Retracement
area
After you’ve placed the Fibonacci retracement mark on your chart the area between the 50% and
61.8% Fibonacci retracement and sell as soon as we trade within that area. It’s up to you
whether or not to sell as soon as we hit the 50% or to wait for the 61.8%.
With experience, you’ll be able to fine tune your entry and profit from trading pullbacks.
Step #5: Place the Protective Stop Loss above the Swing High
The last swing high used to draw the Fibonacci retracement levels can provide us with a very
attractive place to hide our protective stop loss.
A break above the last swing high will invalidate the trade so we want to minimize our losses and
get out of the trade.
Step #6: Take 1/2 Profit once we break below the Previous Swing Low
In order to profit from trading pullbacks we need a strategy for taking profits as well. In this
regard, the ideal place to liquidate our position is once we make a new low.
The market never moves in a straight line and most of the time after we break to new lows a
pullback occurs most often than not. So, if you want to be in an out of the market very quickly
that’s the easiest way to profit from trading pullbacks.
Alternatively, if we want to maximize our profits we can only take half of the profits once we
break to new highs and the remaining half of our position to be taken at a Fibonacci
extension level.
We exited at the -61.8% fib extension.
Note** The above was an example of a SELL trade… Use the same rules – but in reverse – for a
BUY trade.
PM me if you want to read the complete strategy.