How to identify high probability trade set ups📚
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1.Mark out S/R levels for all major time frames of the asset you want to trade w horizontal lines. (ie. 1M, 1W, 1D, 12hr, 8hr, 4hr, 1hr). S/R levels are where liquidity is. Price moves to liquidity.
2.Identify if you’re in a trend or in a range. Trade accordingly.
For best precision trading, watch how price moves on the 1min, 5min & 15min in confluence to those larger S/R levels you marked out. Use 9MA to go sniper mode.
Watch where the 5min and 15min candle bodies close at. These are simply micro S/R levels. Consecutive closes above resistance levels is a sign of a break out. Consecutive closes below are signs of a rejection. Look for a increase of volume as confirmation of a break out.
3.Look at the 9MA on all time frames. Compare it to where the current price and S/R is.
Note at what 9MA time frame price is tending on. Trade that time frame. Bullish above/bearish below. Price acts like a rubber band when stretched away from the 9ma, it always comes back to the 9MA.
4.Look at RSI divergences to spot reversals in trend direction, and hidden divergences to spot continuations in trend direction. Normally needs double or triple divergence to play out and on multiple time frames.
5.Look for SFP set ups at major S/R levels for confirmation of reversal signals. Identifying SFP deviations give you the best entires and best RR. Use volume, recent candle closes, RSI & 9MA as confluence to strengthen your bias.
Entries below supports lowest wicks are your best entry zones for longs. Entries above resistances highest wicks are your best entry zones for shorts. This is where most people have their stop losses (liquidity grabs) that give the best RR when identified correctly.
6. At support: Look for bullish reversal patterns, (reversal trade/Long). Or look for bearish consolidation patterns, (break down trade/Short.)
At resistance: Look for bearish reversal patterns, (reversal trade/Short). Or look for bullish consolidation patterns, (break out trade/Long).
For break out trades I use the Fibonacci 1.618 for my TP targets both long and short. When in confluence with S/R levels raises probability of trade.
Watch for increased volume and the price direction on the specific candle volume comes in on at break out and reversal levels. This will help you identify fake outs or true break outs.
7.Risk management rules. Paper trade until you can do all of this accurately. Entries, TP’s & S/L’s are always planned before entering any trade. Buy at strong s/r levels based on the trend or range you are in. Let price come to you, do not chase the price.
Stop losses go where the thesis is wrong. The better the entry the better the stop loss and less likely it hits. The more confluence between all tools and patterns the stronger the probability for the trade. Waiting for these high probabilities lead to high accuracy.
When you’re wrong, stop trading and identify why your bias was wrong?
Never fomo, wait for the next trade. ⚒️ 🧰
These work best in ranges.
These work best in ranges.
These work best in trending markets.This post is based on this twitter thread.