Buying rectracements off previous high

[Phoenix01]

Hi first time using these forums, I was wondering if anyone here used the simple price action strategy of buying off the swings high and lows.

For example the markets moves up to 5000 then retraces to 4990 then moves up to 5010 and then if the next retracement stops at 5000 you buy a position long. For example a doji would appear indicating the selling has stopped. A simple zig zag pattern forms, i will post some pictures if needed.

It seams to a low risk, high probability trade and looking at previous chart data works well.

Any opinions?

 

[barjon]

Yes, I trade potential trend continuation after 3+ bar retracement, but it's not as straightforward as your example suggests. The danger is that the retracement has not yet finished or that it turns into a full blown reversal.

 

[Phoenix01]

Do you make a profit most of the time? Usually there are dojis with long wicks which signals that people in the market respect the level. Do you make sure its been at least a 3 bar rectracement? I usually look for them intraday on a 5 and 10 minute charts however you can also find big ones on the 1/4 hour charts. How about yourself?

Ive also noticed that you might only get 1 or 2 max each day, because most of the time rectracements dont line up with the tops.

 

[bnaimy]

Retracement RARELY line with the excat top in the scenario you gave, in 80% of the cases it retraces to the the congestion it created at the highs then it continues, very rarly does it stop right at the top and goes higher..UNLESS there is other support present from a different day at the same price level.

THere are many IF her, but i would dissregard the typical BS people learn and that is this :

Market makes a new high , and comes down to the high it broke and then goes higher, thats just fairytale trading.

Please post a few pictures so i can be of more help!

Regards
Bashir Naimy

 

[fantastic4]

I need to see increasing strength in the trend before buying a pull back.

 

[rajgogna]

Hi, I'm currently trying to trade after a retracement on forex. Seems to work if you're happy to take 5-10 pips per trade.

I use 2 timeframes and 2 ma's of 5ma & 10ma.

If they are showing the same trend on both the 4hr and 1hr timeframe then it supports the direction that I should trade.

I then trade in that direction after the price has retraced.

Also, I place orders to open rather than market orders. This way I don't need to watch the screens. I try and take 5pips per trade.

I've been trying this for the past 2 weeks, and seems to be working on the forex markets so far.

Raj

 

[Phoenix01]

What do people use to help them confirm if price is bouncing off a major support or resistance level? The only thing that has worked for me is candlesticks and reconizing rejection candles and patterns. Sometimes its perfect and sometimes it just blows straight through after the stopping candle.

Omar

 

[coopster]

I use level 2 / T&S for US stocks. Candles can work but the patterns get a bit vague on short timeframes.

 

[Phoenix01]

How do you use level 2 and T&S. What do you look for when coming to a support and resistance level?
Is there anywhere i can find some information?

Thanks