ItsEasyOutside

So it's been a while so I thought I'd post this simple price action setup. This is going to look simple upon first glance because I have picked a good chart. Well truth be told, it is easy. But you have to use a little bit of brain power. The challenge becomes picking the trend (which really isn't rocket science either). The setup is easy and once you understand why you trade it, it will fall in place of trading WITH the market makers.

http://i44.tinypic.com/2epukb6.png

So here with have a breakaway market or a clear trend! I indicated this by the red line. Price made a new low showing a down trend and took off with some strength behind it.

Next, price action shows a Hammer or reversal possibility setup? Price Breaks the high to trigger long traders into a trade and take out stops of those following the trend..... (don't pay attention to those small sup/res lines I have, you don't need those to understand anything here) So what happens NEXT?

Price reverses and continues the trend with some more strength and thus creates an OUTSIDE bar. (Indicated by the white arrow)

It's important to understand that you are playing with the big boys and not against them with this. When you look at the charts, ask yourself where people are putting entries and stops and wait for them to get taken out and join in from that point on the trend.

ENTRY : So the ideal entry is as soon as the Outside bar is formed, you enter. You could stick a limit there if you watching the chart and saw the high break first. Or you could just market enter upon the break (green line). Or the worst entry but still good is to enter on open of the new candle.

Take profit is up to you, if you get the trend right, you can expect around 85-95% success to a 1:1RR. So you either take 1:1 or take 2:1 or better but locking up the stop once price moves 1:1.

Time frame doesn't matter but 1hr is my thing with 15min and 4hr coming in next fav's.

You will get heaps of trades every week doing this but you can't trade them all of course. Just pick the best of the best only to trade by going through a thought process mentioned above!

Hi juicyt,

Interesting setup. Can you elaborate on how to identify the 'reversal possibility setup'? Just an hammer will do, or there are variations?

Also, do you have guidelines for the 'new low'? Is it just the immediate low from previous day always?

You use only on h1 time frame only?

Thanks for sharing.

Hi fxcashflow,

The reversal candle to me is the least important part however when you see them it does support the trade better. Any reversal candle you know of will do in this case. Spike, hammer, outsidebar, inside bar etc etc. And the swing low or new low is just a way of seeing a new trend developing. I also want momentum with the trend so watch for clear trends with some good strength.(or large candle) once you can see the trend going then wait for the setup. I find zooming out a little does wonders for you to see the trend. Worste case, you could put like an 8ema on your chart and if price pulls away without touching it, then does the setup. I'd say that will be good enough.

I personally like 1hr TF but that's just me.

jt