Sharing some knowledge on a very popular set up used by many traders - 2618 trade set up.
The recent move of DXY is the best example of this set up.
2618 trade is essential a counter trend or reversal trend set up.
(1) The way I like to use this and found a higher percentage on winning is when price is on a strong trend, hitting a halt and creating a double top -this would be the first sign to weakness in trend.
(2) I would watch for a clear breakout of trend, breaking the neck line creating a new lower low - this is the 2nd sign that a change of trend is coming.
(3) Watch for price to pull back - This would be the time to use a fib tool to measure.
(4) Important - Zoom into and watch price behaviour/price action around 0.618 mark. You want to see reversal candles or reversal patterns upon entry.
examples:
H1 -
M15 -
The entry does not have to be exactly at 0.618, trade upon the candle stick patterns and take an entry on the open of the following candle.
Some strategies may use a pending order, however, I feel that the safest approach would be watching the price behaviour and action around the area of entry.
Please feel free to comment - this is an educational platform so I welcome all views.
Thanks for reading.
The recent move of DXY is the best example of this set up.
2618 trade is essential a counter trend or reversal trend set up.
(1) The way I like to use this and found a higher percentage on winning is when price is on a strong trend, hitting a halt and creating a double top -this would be the first sign to weakness in trend.
(2) I would watch for a clear breakout of trend, breaking the neck line creating a new lower low - this is the 2nd sign that a change of trend is coming.
(3) Watch for price to pull back - This would be the time to use a fib tool to measure.
(4) Important - Zoom into and watch price behaviour/price action around 0.618 mark. You want to see reversal candles or reversal patterns upon entry.
examples:
H1 -
Some strategies may use a pending order, however, I feel that the safest approach would be watching the price behaviour and action around the area of entry.
Please feel free to comment - this is an educational platform so I welcome all views.
Thanks for reading.
