“A Trader just find a best pattern to follow in his life”
I wanna create a series about the patterns I am following that have helped me to profit in this market.
This is one of the patterns what I often expect, I want to start with it because it is one of the most ideal in my opinion.
-> The price moves up and accepts a new Value Area, then I will look for a buy signal.
Moving up in a continuing uptrend means you’re buying in a position that is recognized by the community as bullish. In addition, you’ll has the backing of big buyers who bought from the low value area, they want to protect and strengthen their position.
This is different from buying on a reversal pattern, where you have to fend off many sellers on the way up, as these sellers need to protect their positions. So even though this pattern offers a bigger profit (if you win), in terms of trade-offs, I still choose to buy on the continuation position.
I only buy in uptrends so we agree on the strategic view of what to trade and which direction.
But tactically I would not be a buyer at the point you have marked. Thinking of this pattern as a W, I would normally set a buy order about halfway up the left-hand downward leg. This means I would be entering long earlier than your entry point but at a higher price. The second short downleg would not have triggered my typical stop-loss, and I would have ridden the recovery back into the uptrend.
Of course everyone will have different trading methods and I respect that.
Your approach is not wrong, but you will hardly be sure whether the bears are still strong at that time and whether the price will continue to fall.
If you wait for the price drop to stop, you will have a clearer confirmation that the bears are weakening, now the bulls just need to show up and show a little dominance, you will be safer in your trade.
In effect I do wait for the price to stop falling by always setting a stop buy order higher than current price. So, if price continues to fall, my order is not triggered, and the I have the option of lowering the entry price to track price downwards. But I don’t wait for price to stop falling before setting the buy order.
