Today I will share the filter I have before taking a new setup on the precious metal.
The key idea here is that every time the price was on a bullish trend, we observed clear corrections on the way to the final target. We have defined all the cases; we will trade case 4 using the three previous situations as models.
The main characteristic we observe once the price takes inertia in our expected direction (bullish) is to observe corrective patterns from 4 to 9 days before the new impulse. So what I did was look at them on the 4HS chart with the idea of having an objective parameter to execute setups on all of them.
CASE 1:
CASE 2:
CASE 3:
As you can see, all the structures show an ABC pattern that helps us define the exterior edge of the structure. Once that is clear, we can define pending orders above B and set our stop loss below C.
What about the target?
In the previous scenarios, all of them reached a target with a 2.5 risk to reward ratio except for the last case that reached 1.8, and then we saw a total reversal. In this scenario, our final target is around 1960, with a risk to reward ratio of 2.3
The only place where we may observe reactions is on the previous resistance level of the previous trend. That may be a place where we want to protect our setup, moving our stop loss to break even.
The expected duration of this setup is less than 25 days once it is executed
The risk I will be taking is 3% of my trading capital on the stop loss.
Thanks for reading! feel free to add any idea or chart about this setup on the comments
The key idea here is that every time the price was on a bullish trend, we observed clear corrections on the way to the final target. We have defined all the cases; we will trade case 4 using the three previous situations as models.
The main characteristic we observe once the price takes inertia in our expected direction (bullish) is to observe corrective patterns from 4 to 9 days before the new impulse. So what I did was look at them on the 4HS chart with the idea of having an objective parameter to execute setups on all of them.
CASE 1:
CASE 2:
CASE 3:
As you can see, all the structures show an ABC pattern that helps us define the exterior edge of the structure. Once that is clear, we can define pending orders above B and set our stop loss below C.
What about the target?
In the previous scenarios, all of them reached a target with a 2.5 risk to reward ratio except for the last case that reached 1.8, and then we saw a total reversal. In this scenario, our final target is around 1960, with a risk to reward ratio of 2.3
The only place where we may observe reactions is on the previous resistance level of the previous trend. That may be a place where we want to protect our setup, moving our stop loss to break even.
The expected duration of this setup is less than 25 days once it is executed
The risk I will be taking is 3% of my trading capital on the stop loss.
Thanks for reading! feel free to add any idea or chart about this setup on the comments