Firstly, sorry for my bad english and because it’s near holidays, Merry Christmas and a Happy New Year.
Secondly, I’ve a problem when I determine market structure. I will add a photos to understand better what I want to find out.
I determine HL-HH-HL, then price breaks the last HH and make a little retracement like in the circle and then price goes up. The problem is often when I consider that little retracement a HL, then price came down and break the HL, which makes me think it’s a possible reversal, then price retrace a little and shows signs of exhaustion, I enter with a sell because I think reversal occured, only to see that the price will go up even more.
I tried to see other traders on youtube but I couldn’t find out what makes a retracement a valid one. In my case, what should price do to be considerer a HL (circle)? Number of candles, length… I don’t know.
Maybe you can help me with your criteria.
Stop thinking that the chart tells you what price will do, it does not. The chart tells you what you can do.
When prices are rising through HL’s and HH’s, you can use a retracement to enter lower than price was at HH. There are 2 reasons for this -
you enter at a discount from the price at HH, and price will probably quickly try to get back at least to the HH
when price rises from a HL, that suggests the uptrend is still intact and you want to be long
If price falls through a HL, that trade opportunity is over. The trend might not be over - it might recover and price might start going up again but that is a different trade opportunity.
Have you tried MAs ?
I don’t care what people say crossovers do signify change in trend. I think crossovers sometimes get a bad name because they do not work in ranging markets.
I am very much a 5min timeframe trader and I trade micro trends and use 8EMA, 20SMA and 50SMA. The 50SMA for direction and 8 EMA 20SMA crossover for beginning and end of micro trend, All MAs must be sloping and somewhat fanned out.
This is like the alligator system.
I believe this style works on any timeframe.
