Today I am introducing a great timing play for trades in a trending market which I use to isolate either a reversal point or a midpoint/breakout area of an existing swing. My example shows how you can use both signals to capture a large Percentage of a move with low risk. Below is the PLAY!.
My first orange triangle projected an inside candle which if you place in context was when the market was moving sideways. Now at this point, the trend is UP so if it is a TOP I am not going to short a retracement so I wait for more price action. The market breaks to the upside so I wait and look for a retracement for a possible entry.
I Now have the green triangle projection looming pretty close and the market is now pulling back into it. I get an outside reversal candle on my projection so a break to the upside will put me in long. Where do you think my likely exit will be?
Well if you remember, The orange triangle projection "Failed" as a reversal, therefore the fact that it continued up means that it was likely the 'Midpoint" of the Price move! ( Can also be an equal time move ). Can you see how this fit in with my exit point ( The Projected Top ).
I now have a Red triangle projection in place, Let's see what unfolds:)
PS: Reverse for a falling market, ie. Use 2 lower Tops and the lower bottom in-between to create the triangle.
PSS: Like everything, will time +/- 1 or 2 bars for reversals in most cases, If it is a midpoint more discretion is required. If you notice the above example the '2nd' half of the move faded to right of the measured move therefore took more 'Time' however the 'price' move was spot on!