Hello friends,
Market finally picked a direction and it looks like it's gonna continue downtrend. Many novice traders are long biased and they find it very difficult to trade in down-trending market. Today, I am going to share a simple strategy for making quick gains by trading pullback in a downtrend.
Below is a chart of
AMZN in daily timeframe. You can see that price is in a downtrend.
Below is 5 minutes timeframe chart ofAMZN.
You can see that above chart fulfills all the rules mentioned below. For this trade, Risk to Reward ratio is 1:3.
Checklist -
1. Price is making LL while RSI is making HL - Bullish Divergence(highlighted in the chart)
2. RSI is below 30 - Price is oversold
3. Price is showing signs of reversal - Long lower wick candle(highlighted in the chart)
4. Above three confluences occurs during the first 1.5 hours of market open before market goes into mid-day chop
5. Risk to Reward ratio is at least 1:2 (shown in the chart)
Entry -
1. Enter at the next candle open after reversal confirmation
Exit -
1. Set Stop-loss below the recent low
2. Set Target at the first resistance
Market finally picked a direction and it looks like it's gonna continue downtrend. Many novice traders are long biased and they find it very difficult to trade in down-trending market. Today, I am going to share a simple strategy for making quick gains by trading pullback in a downtrend.
Below is a chart of
AMZN in daily timeframe. You can see that price is in a downtrend. Below is 5 minutes timeframe chart of
AMZN.You can see that above chart fulfills all the rules mentioned below. For this trade, Risk to Reward ratio is 1:3.
Checklist -
1. Price is making LL while RSI is making HL - Bullish Divergence(highlighted in the chart)
2. RSI is below 30 - Price is oversold
3. Price is showing signs of reversal - Long lower wick candle(highlighted in the chart)
4. Above three confluences occurs during the first 1.5 hours of market open before market goes into mid-day chop
5. Risk to Reward ratio is at least 1:2 (shown in the chart)
Entry -
1. Enter at the next candle open after reversal confirmation
Exit -
1. Set Stop-loss below the recent low
2. Set Target at the first resistance
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.