This is one of my favourite price action strategy to trade because it requires a lot of patience. You need the market to check 5 different technical boxes before we even think if placing a trade. These are the 5 technical boxes that the market must complete before be we place a trade:
IDENTIFICATION OF 123 STRUCTURE
A 123 structure is basically a bullish or a bearish structure and if you don't know the characteristic of a bullish or bearish structure then you need to go and get yourself educated on that
IMPERFECTION/SELLERS TRAP PHASE
This is the phase where the market renders a 123 structure imperfect, which is also the first sign of communication from the market that it's about to change direction from bullish to bearish and this sign is often misread by retail traders as a sign to go short and that's why I also call it the trap phase! The imperfection phase Is the phase where the market comes out of contraction and moves into expansion.
RETEST OF PREVIOUS STRUCTURE PHASE
This is the phase that we are currently in and this is a tricky phase because in order for this phase to be completed the market must cross the middle line of the contraction phase and that's something that's not easy to do because that's where we have the most resistance. I usually call this the decision point because if the market is able to cross this point then this phase will be completed with ease and if it doesn't then we will start our downward expansion phase very early. So how do you know if the market will cross the middle line? The simple answer to that question is "TREND". Figure the rest out for yourself!
ON MY NEXT UPDATE I WILL FINISH TALKING ABOUT THE OTHER 2 PHASES BECUASE WE ARE NOT THERE YET...…
Any opposing comments, views, arguments, feedback or questions are welcomed!