Hello guys if price it’s in resistance in 4h tf for example and a candelstick pattern appears to go short can i go directly short or i should wait for breakout confrimations on lower timeframe ?
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Placing the trade before confirmation of the move is high risk, it has a lower probability of success. But if you are correct, the rewards could be greater.
This is a very personal question without a right or wrong answer, only YOUR answer -
do you wish to accept a higher percentage of failures in exchange for a higher return on your successes?
or
do you want a higher percentage of successes with a lower return on these?
Personally, I cannot stand the stress of seeing most of my trades go red and close at a loss, so I go for the low risk, high probability trades with limited rewards each. But that’s a personal choice only.
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Thanks for answering.
in which tf u wait for breakout and a retest ?
I only place and manage trades on the daily time-frame, though many traders looking to be in a trade for several days will use the 4-hourly chart for timing their entry/exit.
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I always count the market momentum to use this kind of trading opportunity!
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Resistance is above price and Support is below price. If you’re looking for a breakout at resistance you will be looking to go long, not short.
In either case, if at true resistance or support, when price breaks out, it will almost always retest that level. As a breakout trader your safest entry will be to wait for the retest before you get into the market.
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i dont now if i was clear enough in my question but i look the price was on resistance and some candelstick patterns appear to go short and i want to know if it’s better to wait for the breakout and retest to go short or only with candelstick patterns ?
I suggest that you don’t use diagonal trend lines. They are meaningless.
Use market structure instead. See my annotations below.
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Using his chart for this example is a real eye opener. I too need to stop relying so much on diagonal trend lines and chart patterns and focus more on market structure.
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Using even the most basic market structure concepts will greatly enhance your trading. Note also the other retests as price retreats. These are opportunities to add to your short position. All those retests provide low risk entries where you can use relatively large lot sizes while risking minuscule percentages.
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perfect example on gold right now, long signal. volume also confirms with the wide spread down and a bullish reaction on increased vol. ofc if i m swing trading then i ll just use heikinashi and trendlines and horizontal support and resist at areas of confluences.
same chart with heikinashi. pullback trading very profitable if done right and waiting for a trendline break on daily for example or weekly, or a 123 or abc pattern on these higher timeframes and then u can wait for the same pattern on a lower timeframe for a lower stop. simple and very effective. i don t trade breakouts as i feel like i m chasing the price, and more often then not breakouts are fake. but that s just me. anyways, as quadpip said, i think u should understand first what u trying to trade before risking anything. cheers and happy new year
As I see, it’s one hour chart; & the level you marked-out is not looking like a strong level!
I would always look for confirmation.
update for my previous post few days ago, it s almost at 1to 1 RR, DD for the 1 hr chart was 35 pips with a stop of 70ish. first tp in my book would be previous resistance(that s in total around 110 pips from my entry). see how it behaves there, take some partial profit, move to BE and try to ride the trend out as imo gold will get to atleast the previous daily highes unless something changes. i m saying this here cos this was a breakout trade, but with the entry after the retest of the resistance that was broken and held as support. cheers and happy new year