RULES
- Use daily timeframe
- All decisions to trade are made at close of candle (not during a candle). Strictly speaking, that means at midnight GMT, but I wouldn’t worry too much about being late on acting – just don’t act early.
Short entry:
a) Close of yesterday’s candle reaches the maximum close for 22 days (signaling that it’s overbought)
b) Close of today’s candle is less than yesterday (1st reverse signal)
c) Close of today’s candle is less than the close of 2 bars back (2nd reverse signal).
Long entry
a) Close of yesterday’s candle reaches the minimum close for 22 days * (signaling that it’s oversold)
b) Close of today’s candle is more than yesterday (1st reverse signal)
c) Close of today’s candle is more than the close of 2 bars back (2nd reverse signal).
In plain English, in an uptrend, when it’s making new highs after a month, it becomes much more likely to retrace, so when you do see candles falling back down, it’s more likely to be a turning point than just a blip. Opposite applies for downtrends.
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