The picture above I look at the daily for the trend and who is in control for either supply or demand. In this instance its supply in control and the trendline is telling us the trend is down, so I’m looking for shorts.
Then I go to the H4 chart and look for the extremes there for the pull back i.e over bought and oversold in the attached picture.
So in the pictures it looks great in the real world but I have found problem is defining away how to filter the bad pull backs to good ones! I was wondering anyone on here has any input that could help me with finding the best setups and the strongest setups? The only thing I can think of is say in this scenario is lining up resistance from the daily to the 4h time frames…
Would love someone who knows a better way I could master this simple strategy as its been doing my head in for such a long time.
Mathew
You’ve drawn a trend-line on the daily picture & labelled it “downtrend” - is that purely just to label it as a downtrend or is that an actual trend-line that you would use to trade? If it’s the latter, that’s where the serious problem arises. It is not a good application of a trend-line.
In this instance, try drawing the trend line from the high & it will look miles better & then when you talk about pullbacks, you’re looking for pullbacks to this line which will be apartment on every timeframe.
You wanted a way of filtering the bad pullbacks, I gave you one: wait for a better pull back.
Draw a better trend line on the daily, wait for a deeper pullback & the supply/demand will be there.
It’s all differences in strategies, your daily chart was labelled that you wait for a 2-bar pullback? Why 2-bars? Why not 3? Why Stoch & not another indicator?
Yes your pictures plot out a good trade but call it a 3-bar pullback & examples could be found, call it 4-bars & again, examples of a good trade could be found.
A trend line on the daily chart is going to be heavily watched so price touching it is going to have supply/demand written all over it.
I had a quick look at the chart & this is what I’d be looking at but as I said, trading styles vary, horses for courses & all that.
Problem might simply be with your definitions bro. Supply and demand traders profit as price moves between these zones. When supply runs out at a zone you enter on a guess to which direction the next demand zone will form. Then exit when the price reaches that zone.
You’re trying to trade pullbacks during trends. Different ball game altogether. And as such must be traded differently.
Trade your zones bro, much better R:R ratio doing so.
The answer is - by trials and errors. Trade your analysis to see is it works or not. On different timeframes patterns may be confusing because they’re not subject for strict mathematical or economical rules - its we, people, that bid and offer on US Dollar and then some smart money bug guys use these times of market weaknesses with coordinated action to drive your trade to SL’s and Stop out.
Just look at yesterday NFP:
heavy selloff on greenback force EUR/USD to renew peaks, but then NFP… like bolt out of the blue. It was not exceptionally strong (just +10K from expectation, +0.1% from wagers expectation) but it send price by 100 pips down. It was a TRAP for bulls (who was sure now EUR/USD occupied 1.14, put SL somewhere near 1.14 round number) and smart big guys made huge money, pushing price to 1.14 then triggering heavy chain selloff to 1.1350). You won’t find any logical and reasonable explanation in clever books which explain you supply and demand. Cuz in such times the only sophisticated rule that works there is human psychology.
