Bit more of a detailed review of Tuesday’s one-shot-one-kill trade in this video.
I’m frequently asked for my “favorite setups” – no doubt because my trading looks pretty random from day-to-day. So in an effort to show there are recurring patterns, I’ll be adding videos under this “Favorite Setups” tag.
Tuesday’s Long trade was a classic “Holding Above Resistance” – a continuation pattern that shows the market still has strength and is about to launch into an exhaustion buying pattern.
The setup sequence goes something like this:
- The Emini starts to rally after Exhaustion Selling, First Bullish Divergence and a Flush pattern on Better Momentum.
- However, the uptrend is not over because we haven’t seen Exhaustion Buying and First Bearish Divergence on Better Momentum.
- We break above Resistance on Better Sine Wave and hold. No one is anxious to sell.
- Again, the uptrend is not over because we haven’t seen a “Pull Back” (PB) to “End of Trend” (END) sequence on Better Sine Wave.
- The dips are being bought by the Professionals, with blue (Professional) bars on Better Pro Am appearing at the bottoms of the small retraces. Time to get Long.
- Then we “Jump the Creek” with a Professional blue bar buying the new highs.
- The uptrend gathers speed as we run stops, break to new highs and start to see Exhaustion Buying signals.
- I exit the trade on my 4-point Profit Target which happens with a Pro Signal exit.
- However, you could squeeze out a little more from the trade by continuing to hold until you see First Bearish Divergence or an “End of Trend” signal.
To see the actual trade in real-time, watch this video after the 5:13 mark. Note, the reverse pattern (“Hanging Below Support”) also works.