Advanced Tactics…
Well, we set our stop losses outside of 85% right? That means that we believe we are wrong if price action breaks below 85%. Well, this knowledge allows us to put ourselves in a position to catch reversals and play counter trend trades.
This is always more risky than playing with the trend so you need to be quick to take profits.
Here is a trade I took tonight. Often times price action will stop running in a direction and consolidate and reverse, even if it is only primary. I have found that price action can be considered to be NEUTRAL if it is between the 89EMA and the 150 JTHMA (i’m sure there is a longer period SMA or something similar to spot this if you don’t have access to hull moving averages).
Thus, this is a good indicator of neutral price action where you can get in on the action on both sides and make some more pips. It requires you to dial down to a smaller time frame chart to be more nimble with your entry and exit. My smaller chart is a 144T (vs. 233T), roughly twice as quick, over layed with a quicker 50 period JTHMA, and the usual 89 EMA. I want to make sure i’m trading with the trend on this chart on these setups. So even though it may be counter trend to my big 233T chart, it is with the trend on our 144T (or similar) small time frame chart.
Image 1: Price action clearly in a point of neutrality between MA lines.
Image 2: Note how price action has broken the last dominant swing upward by breaking 85%. This adds to my confidence in playing a counter-trend short side play here.
Image 3: Pretty self explanatory.
Image 4: Dialed down to my quick chart I take the same pullback with the small time frame bias and take profit quickly (or at least reduce risk quickly). I took profit at a known level of resistance, being the 89 EMA line on the chart. But still good enough for a quick +18 pips.
And that is one way you can identify and play counter trend possibilities with Fib grids!
Cheers!
