I re-created a trade I executed on a demo account I've been using to test this idea. I've been working on this strategy and, more importantly, my patience for the past 6 months or so. I'm Wondering if anyone else uses something similar to this when looking for entry points & confirmation. I'll do my best to explain the thought process on why I entered long, because last Friday I made a post with a bearish prediction.
The white trend lines are a bullish channel that started back in 2018. The red was drawn on the H4 from the high point in early March.
There are 3 steps I use(d) to try and find the right entry.
1) Break above the trend line. This was a clean break above the trend line with a fairly strong candle close. Easily could have been an entry point, but the candle wick was too long for me to use this breakout as the sole confirmation.
2) Confirmation Zone. This is something I started using after entering on too many false breakouts. I created the top line of the zone by simply using the top of the previous higher high. The bottom line of the zone isn’t nearly as important. I typically will look to put it at a S/R line that has 2-3 pivot points on it. In this case, the $1630-$1645 range had many pivot points.
3) Strong bull candle broke above the confirmation zone and closed. The hard part here is having the patience to wait for the candle to close, and making sure it’s a strong candle with more body than wick. This was strong, and enough confirmation for me to enter.
Entry) I didn’t have a Buy Stop in place, so I dropped down to a shorter time-frame to try finding the best entry point. After I entered, I set my S/L just under the Confirmation Zone.
Note: I don’t typically start out with a set T/P. I will usually draw lines like I did on this and if they hit it, I’ll re-evaluate to see if I want to close out or not. I like to monitor it and manually adjust the S/L, or use a trailing stop. Each situation is different though.