IMPULSE – CORRECTION – IMPULSE
Daily/4H/1H/30mins timeframe (select only 1)
 Price trailed by 30SMA – ensure strength of first impulse wave (✓)
 Pullback between 30SMA and 150SMA (✓) Not really applicable, but yes
 Corrective structure formation with 2×2 touches (✓) Flag
 Stop order at the break of corrective structure with stop loss after swing L/H
 Stop order after price bounce off area of value with volatility stop (✓)
Additional confluences: Support or Resistance, ADX30, Linear Trend Lines, Fibonacci Retracement, ATR and Elliot Waves.
1% capital risked for potentially 1.9R
Open: 1.3964 | Stop loss: 1.4022 (-58 points) | Take Profit: 1.3852 (+112 points)
Keying in the trade, use volatility stop placed under/above an established swing L/H or moving average cross or estimating volatility using ATR.
Real stop loss placed under/above the anticipated swing L/H using 150SMA as a guide.
Take profit calculated using the length of the prior impulse wave rounded off to next nearest swing point/key level.
Once entry triggered and break out, shift automated volatility stop to real stop position.
At 50% of 2nd impulse or a swing L/H established, shift stop to break even.
At about 80% of 2nd impulse, shift stop to the 50% mark or below/above swing L/H.
If price breaks and closes under/above the 30SMA, tighten stop loss and prepare for manual exit.
 Initial stop loss
 Trailing stop, as mentioned under management
 Manual exit due to change of momentum and break of market structure
 Take profit
Remarks: There was a coil in the market and a large bearish candle was expected, however, a large bullish candle emerged. The flag pattern that was traded has played out and bearish momentum just isn’t there anymore. Further confluence from the daily (see picture below) plus this confirms the analysis as made on T18 but has only fully formed up now. Structure on the daily: Will be looking to go long instead.