Yep. It bounced right off the lower line of the S+R zone and within 30 pips of the trendline. It was almost a perfect, textbook reversal trade! 
I wouldnāt trade any reversals off candle pattern alone. Just look back in your charts and see all the lone candle patterns that looked like reversals but didnāt work out. They are everywhere! 
Youāre on the right track. Iād call that a so-so reversal by Nickās method and by my method.
Itās a good trade if you like higher-risk trades, but I wouldnāt trade it. I like trading less and holding out for the better setups. Although, you really only need to be right 51% of the time to make money, and Iād say that has a greater than 51% chance of working, so go for it if you want to!
Hi Phil, just wondering if youāre watching the GBPJPY at the moment? I will be looking to buy once I get a confirmation candle as the trendline has been hit. Butā¦ where would you put your stop loss ? If you go to the last support level it will be getting close to a 250pip stop loss. Surely this is too large? Would mean I would have to get at least 250 tp to make it 1:1 risk reward.
Another questionā¦ If I was looking to set this trade up and leave it, ie. set sl and tp at the same time (eg. if in a different time zone and needed to sleep!) , would you aim for a 1:1 risk reward? I donāt like having large stops for small gains.
Thank you!
I am watching it, and was just about to put up a post about it!
First off, there IS a S+R zone right where the price is in the picture below, but I removed my normal blue lines that mark the zone because the chart was too cluttered. The zone is between 154.35-155.35.
I would put my SL at 154.30. Thatās below the reversal candle, the trendline, and the S+R zone, so it should be a safe stop. Iād enter the long trade at 155.40 (a few pips above the zone) and exit at the previous swing high which is at 156.45.
That would give you a 1:1 ratio and be a very safe trade that could happen while you slept. Remember weāre in an uptrend, and the definition of an uptrend is higher highs and higher lows, so using the previous high for a TP is a really safe bet!
If you were around to watch it I would not exit at 156.45 thoughā¦ Iād exit at the first reversal candle after 156.45 or around the upper trendline, whichever comes first.
Great, thanks for this. I was thinking wait for the doji candle to form (which Iām assuming it will be), then place my order a few pips above it. But youāre right if I wanted to set it up before the candle has finished, then I could.
According to my chart then I would enter at 155.40, with SL = 154.26, and TP = 156.43ā¦ which is almost the same as yours . Excellent.
If I can stay awake to watch the confirmation candle, would you suggest entering just a few pips above the close of the candle, rather than at 155.4?
One more thingā¦ do you trade the most current trendline or the all encompassing trendline? Eg. I was looking to trade the EURGBP on a sell when it hit the major downward trendline which I did do , but then it shot back up and broke through the major trendline. Which says to me pay more attention to the most current line. Or maybe stay away from this pair!
Thanks again, really appreciate your help
I would enter at 155.40
this is a strong area to break. i call it a ppz (price pivot zone) and your entry is right at it??? I know you are using the lwp as an entry or at least i think, but i would consider looking for a break of this 155.40 zone before going long
Hey guys, donno what with you, but I am looking foreword for a double top and going short when it breaks the neck line which is a scalp line as well.
But that it a bit longer term from us nowā¦maybe a few more days.
But I think this long trade you are looking into can be a good one and will stop and make a double topā¦just a wiled guessā¦letās see what will happen.
Ben
The candle has gone down and wonāt be closing as a doji now, but if it had and you were awake I would have entered a few pips above it, just like you said. In fact, if it ends up being an IB (or nearly an IB) Iāll still enter the trade right above it. But if price keeps going lower than the previous candle Iāll move my entry back up to 155.40, because the reversal might not be coming yet, or at all!
Iāll trade any 4H or higher trendline that has a good bounce off it, whether itās a shorter-term trendline or a longer-term all-encompassing one. Obviously I like it to also be a bounce of a S+R zone, but itās not necessary if everything else looks good.
Could you elaborate a little, Johnny? Is a price pivot zone similar to a regular pivot point??
I guess I spoke too soonā¦ It might end up a dojo after all!
Better than that, the price action is great!
It is a green candle now
Iāve gone ahead and set up and pending order for a long at 155.40. I may move it down a little after the current candle closes in 20 minutes though, depending on what happens.
Ok so itās not quite an inside bar (misses by 2 pips!) , and not quite a dojiā¦ what would you do? Still enter at 155.4 , or just above the candle? Sorry to be pedantic, I just want to get the perfect entry point
I think a good strategy will be entering once the body of the current candle will pass the top high wick of the breaking candle (the previous one).
I know it is working good for breakoutsā¦what do you think about using it for reversals?
It is a bit different for reversals thoughā¦just a wiled thought.
Ben
Normally I would say enter right above the candle for a doji or inside bar (or close to them), but I just noticed that right above the candle is 155.00.
Iām not going to put an entry right on such a strong psych level, but I will lower my entry from 155.40 to 155.25 unless something drastic happens in the next 8 minutes.
Ah yes, was just about to move mine to 155.01ā¦ have now changed it to 155.32 (assuming 7 pips spread).
Also, my stop loss is now 154.22. Hopefully that should be ok
Sounds good. Iāve also moved mine to 155.25 plus the spread now.
Sorry for the dumb questionā¦but what is āspreadā ?
Thatās not a dumb question at all. The spread is the difference between the buy and the sell price. The spread is basically the ācommissionā the broker charges you for the transaction.
Itās the reason when you open a trade that you start out slightly in the negative instead of at zero.
When you setup pending long orders you have to add in the spread or youāll get in too early, because most charts are draw on the sell (bid) price, and long pending orders are entered on the buy (ask) price.
Thatās why we set up our long orders at 155.25 plus the spread.