This setup is called. Cya L8r Brian Beamish.
Ideally, your trade direction matches your bias, which you will have your own sound reasons for. (with that said, our bias is often wrong, and this trade setting up will often be a solid signal that we are wrong).
You are waiting for textbook reversal trade in the wrong direction, to setup. i.e.
Divergences
Ms/Ws
Key Reversal Candles.
TL Break Outs
etc
Here is a recent example from EURUSD:
And here is a recent example in Gold:
Now, every trader and their dog, are trained to look for all these signals, which of course, are all signals to get long and where should a good disciplined trader get long on a reversal pattern from? The 61.8% retrace of course, cos them Fibonacci numbers have magical powers (just ask Brian Beamish if you don't believe me).
Here is Brian Beamish's Setup in the EURUSD:
And here is Brian Beamish's Setup in the XAUUSD:
Note: DONT DO WHAT BRIAN BEAMISH DOES!
The Cya L8r Brian Beamish setup occurs, when the market moves heavily against poor old Brian's position.
Strong bearish moves against Brian Beamish's Long in the EURUSD:
And also in Gold:
Here are the Cya L8r Brian Beamish entry parameters in EURUSD (note, on 60m chart here for clearer resolution) In the EURUSD, there is a strong bearish push into and beyond Brian's entry point. In this case, the level has been broken, and the trade entry is on the retest of the desperation zone (where Brian got long from). This is a riskier scenario, than the example in Gold, where the level has been Broken, price has Closed beneath the level, Retested the level, and then Continued (BCRC'd) away from the level.
And here is the same (similar) in Gold. As described above, in the Gold example, price has BCRC'd the desperation (Brian's Trade Entry) level:
And here is how the Gold trade is going (EURUSD already banked and with full disclosure, I took the EURUSD short much higher up the chart than the example shown, for reasons that are much harder to explain and quantify):
Notice how cleanly XAUUSD has been trading AFTER it gets beyond Brian's Long Entry Zone. It has no motivation to jack knife back and take out the swing highs, because the market has no interest in letting Brian escape his losing long trade with his shirt on his back. It is very often in situations like this, where the market has left a desperation zone (trapped traders), and his moving towards the pain zone (Stop Loss levels), that the most basic of trading strategies will work.
Selling on 50%-61.8% retraces between swing highs & swing lows
Fading tests of whatever MA is framing the trend (in this case, the 4Hr20)
There is even a successful textbook descending bear triangle in there.
Ironically, the times when the market trades like all the textbooks and trading educators tell you that it does on the lower time frames, are the times when most retail traders are stuck looking at the higher time frames, thinking in the opposite direction. Thus, what makes the trade work, is having a clear level full of TRAPPED traders, with a clear level of PUNISHMENT (aka Stop Loss Rinses) in sight....and in actual fact, this is how the market behaves nearly all of the time. Discerning clear levels of trapped traders and their liquidation and/or stop out zones is however another matter....except when you get these clear failures of 'obvious' trade setups.
Ideally, your trade direction matches your bias, which you will have your own sound reasons for. (with that said, our bias is often wrong, and this trade setting up will often be a solid signal that we are wrong).
You are waiting for textbook reversal trade in the wrong direction, to setup. i.e.
Divergences
Ms/Ws
Key Reversal Candles.
TL Break Outs
etc
Here is a recent example from EURUSD:
And here is a recent example in Gold:
Now, every trader and their dog, are trained to look for all these signals, which of course, are all signals to get long and where should a good disciplined trader get long on a reversal pattern from? The 61.8% retrace of course, cos them Fibonacci numbers have magical powers (just ask Brian Beamish if you don't believe me).
Here is Brian Beamish's Setup in the EURUSD:
And here is Brian Beamish's Setup in the XAUUSD:
Note: DONT DO WHAT BRIAN BEAMISH DOES!
The Cya L8r Brian Beamish setup occurs, when the market moves heavily against poor old Brian's position.
Strong bearish moves against Brian Beamish's Long in the EURUSD:
And also in Gold:
Here are the Cya L8r Brian Beamish entry parameters in EURUSD (note, on 60m chart here for clearer resolution) In the EURUSD, there is a strong bearish push into and beyond Brian's entry point. In this case, the level has been broken, and the trade entry is on the retest of the desperation zone (where Brian got long from). This is a riskier scenario, than the example in Gold, where the level has been Broken, price has Closed beneath the level, Retested the level, and then Continued (BCRC'd) away from the level.
And here is the same (similar) in Gold. As described above, in the Gold example, price has BCRC'd the desperation (Brian's Trade Entry) level:
And here is how the Gold trade is going (EURUSD already banked and with full disclosure, I took the EURUSD short much higher up the chart than the example shown, for reasons that are much harder to explain and quantify):
Notice how cleanly XAUUSD has been trading AFTER it gets beyond Brian's Long Entry Zone. It has no motivation to jack knife back and take out the swing highs, because the market has no interest in letting Brian escape his losing long trade with his shirt on his back. It is very often in situations like this, where the market has left a desperation zone (trapped traders), and his moving towards the pain zone (Stop Loss levels), that the most basic of trading strategies will work.
Selling on 50%-61.8% retraces between swing highs & swing lows
Fading tests of whatever MA is framing the trend (in this case, the 4Hr20)
There is even a successful textbook descending bear triangle in there.
Ironically, the times when the market trades like all the textbooks and trading educators tell you that it does on the lower time frames, are the times when most retail traders are stuck looking at the higher time frames, thinking in the opposite direction. Thus, what makes the trade work, is having a clear level full of TRAPPED traders, with a clear level of PUNISHMENT (aka Stop Loss Rinses) in sight....and in actual fact, this is how the market behaves nearly all of the time. Discerning clear levels of trapped traders and their liquidation and/or stop out zones is however another matter....except when you get these clear failures of 'obvious' trade setups.