A Pattern for Long term and Scalping trades

Dear traders,
Hi.

Frequently, I see a pattern in almost all time frames, 5 minute to daily. Two samples of the pattern are attached to this post, one in 5-min time frame and the other in 1-hour time frame. The pattern is described as follows:

1) move from level 1 toward level 2 (distance is a);
2) pullback from level 2;
3) back toward level 2, break level 2 and go further;
4) back to level 2; "At this time level 2 is the entry point"
5) pullback from level 2 and move toward level 3 (distance is a); "Level 3 is the exit point!"


Any idea?

similar to elliot wave right? im not sure though it will be better if u elaborate more


TIA

Yes, it is somehow similar to Elliot waves, but here we can define exact entry and exit points. The note here is that in almost all patterns which I found, the distance from L:1 to L:2 is equal to distance from L:2 to L:3 !
Do you see some patterns like this on your chart?

nothing new about that..that's call 123 pattern , some trade it at breakout .. others before breakout ... some like you wait to back to breakeven level and set the trade

Please, in this pattern, how do you enter and exit and where do you place the stop-loss?

i can say there is a lot ways to trade using 123 pattern ... you can find a lot ways to trade using it .. the regular idea is that:

example 1: enter at breakeven of point 2 target is 161.8 fibo(draw fibo from point 2 to 3). stop loss at 3:

example2:wait breakeven and wait price return again to point 2 and enter the trade:

example3:draw fibo from point 2 to 3 and wait price break 61.8 fibo for set the trade:

of course if you looked through forum you will find a lot old topics about that for example some traders put stop at point 1 instead of 3.
some traders draw fibo from 1 to 2 and set targets based on that like 161.8 at first target 261fibo second target and lastly 423fibo like that:

personally i already trading using that pattern with my TE at my profile if you looked you will see my trade now at NZD/USD and if you looked at chart that what you will find:




i trade using number 3 i wait price to close over 61.8 fibo to take my trade

Dear JsCave
Thanks for complete description. It really helps me.

you are welcome