One of my favorite setups that I found through Oliver Velez is called the Violence into 200. It is one of my go to bread and butters when it happens.
Below I will explain what to look for and how to play it
Step One:
Look for space between the 21ema and the 200sma which indicates a contraction back to the mean. The 21ema will be declining. Don't try to buy a "bounce" off the 200sma thinking it is support. Look for a violent move down, crashing into the 200sma. Violence weakens support.
Step Two:
Upon witnessing the violent bar, you should jump in near the close of that bar and place your stop above the high of that bar.
50% of these plays do not bounce and 50% do bounce. I would not risk missing the play by waiting for a bounce.
If a bounce happens, you have two choices. Limit sell at around the 50% mark of that violent bar or limit sell under that green bar that bounced off the 200sma. One is not better than the other.
There are three entries that you can take
Number One:
Jump in the violent bar's close with a wider stop near the top 80% of the bar, in this case 75 ticks. Use a 1.5R target
Number Two:
Limit sell order placed at around the 50% area in anticipation of a dead cat bounce
Number Three:
Limit sell below the green bar from an anticipated dead cat bounce
Number Two offers the best entry and the best reward but 50% of the time, these plays don't offer a bounce.
All of this information is from Oliver Velez and I take no credit in the creation of this play. I am merely sharing a fantastic setup
Below I will explain what to look for and how to play it
Step One:
Look for space between the 21ema and the 200sma which indicates a contraction back to the mean. The 21ema will be declining. Don't try to buy a "bounce" off the 200sma thinking it is support. Look for a violent move down, crashing into the 200sma. Violence weakens support.
Step Two:
Upon witnessing the violent bar, you should jump in near the close of that bar and place your stop above the high of that bar.
50% of these plays do not bounce and 50% do bounce. I would not risk missing the play by waiting for a bounce.
If a bounce happens, you have two choices. Limit sell at around the 50% mark of that violent bar or limit sell under that green bar that bounced off the 200sma. One is not better than the other.
There are three entries that you can take
Number One:
Jump in the violent bar's close with a wider stop near the top 80% of the bar, in this case 75 ticks. Use a 1.5R target
Number Two:
Limit sell order placed at around the 50% area in anticipation of a dead cat bounce
Number Three:
Limit sell below the green bar from an anticipated dead cat bounce
Number Two offers the best entry and the best reward but 50% of the time, these plays don't offer a bounce.
All of this information is from Oliver Velez and I take no credit in the creation of this play. I am merely sharing a fantastic setup
Nota
Here is an example today of Violence into the 200sma that did NOT bounce. Just straight down.Nota
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.