Before starting, I want to clarify that this doesn't mean "I'm short" this means: "I don't know what the price may do next; however if the price makes THIS sequence of patterns that I have defined in advance, I may be in front of a good situation to trade." WHY? Because I had tested this pattern in the past, both through real trading and backtests, and overall, I have a statistical advantage. Therefore I should trade it. (That's the logic)
Ok, let's start:
* The price has broken the ascending trendline on a -12% movement, and now we saw a bounce, and the price is close to reaching the main trendline of the current bearish movement.
* This is relevant because the price is close to the main level of the current bearish trend (the descending trendline). IF the price breaks it, we should start thinking about a flat correction with that bottom defined or a new bullish impulse starting. However, IF the price starts falling again, the bearish trend may continue.
*IF the bearish trend continues, I'm waiting for a breakout of the current yellow structure. When I mean a breakout, I want to see the price breaking it at least a little bit.
*IF that happens, I will be waiting for a movement, as you can see on the template, and I will trade in the same way explained there. With a break-even at 4145.00 (this means that I will move my stop loss to the entry level)
These are the 4 possible scenarios: 1) I never trade because the setup is never executed 2) I trade and I'm stopped out (-3% of my capital) 3) I trade and is a break-even ( 0%) 4) I trade and is take profit (+6% of my capital)
@Solldy, Thanks for the feedback! Have a great day.
Dips007Trading
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I like how you postulate all your IF's, this shows you truly are waiting for the picture to be painted and not reaching firm conclusions in advance and are being reactionary and not predictive; either way if you look at price action like this you will do well.. our job us not to predict, but to participate in the move..
ThinkingAntsOk
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@Dips007, Thanks for your comment! You truly understood the main concept of the strategy we are executing. Have a great Sunday and a good beginning of the week.