A new Life, A new Career, A new Dream - I am a Trader
- Thread starter Taiki
- Start date
Trading Pullback Setups
Pullback is one of the setup which defines my entry in a trending market (uptrend/downtrend). For past few days this setup is giving me good signals and R:R as Nifty is in an uptrend as well.
I learned about this setup in Lance Begg's book, so again no new invention from my side, but this is how I have interpreted it and this is how I am applying it in my day to day trading.
Criteria
- To trade the pullback setup the very first criteria I look for is a tending price movement. 3 min is my trading frame. So price should be in a trend in this chart. (Taking example of an uptrend), Lets say price is making a higher high and higher low, when price takes out the previous swing high it goes higher and I just let it to make a new high and wait for a pullback.
- This pullback should not make the newer low at the same level or below the previous swing low. If the new low is below the previous low, then the strength of the uptrend is finished, I wait for a new trend/pattern to be established. And if the new low is at same level as the previous low, price is more likely to trade in the range and goes in sideways direction. But here I take the trade (TST of sideways range low) and my target stays at the recent high.
Rules
The two very basic rules I trade upon are
-Trade in the direction of trend
-Trade against the weakness
Pattern
(Taking example of an uptrend here )
- When pullback occurs, it is basically few red candles dragging the price down or a series of green/red candles that makes the price to go down and gives me a chance of entering at lower level.
- Pullback in an uptrend is a bearish order flow, and I wait for weakness to appear in the chart to trade against that.
- Weakness is confirmed by a green closing candle (in 3 min chart) which indicates the 1st sign of weakness. This is the point where I watch both 3 min and 1 min chart.
- The subsequent candles should not break the low of the 1st green candle to confirm the weakness. Sometimes there appears a green candle but the next candle becomes red and closes below the low of prev green candle. SO here the bears are still in control and weakness has not set it.
- 1 min chart gives me the range after weakness sets in, and I decide the entry level, SL from 1 min chart. 1st Target is the prev swing high. As price comes near the swing high I move my SL to breakeven, and wait.
- IF price is taking out the swing high more bullish order flow is likely to come and taking price to a newer high, else if any reversal pattern appears I consider scratching my trade.
Steps in Trades
- Trade development (An ongoing uptrend and a pullback)
- Weakness in Chart (A green candle close and subsequent candle should respect the low making a new higher low)
- Trade confirmation & Entry decision
When the resistance is taken out, short traders will be trapped and will run to cover their position pushing price to go higher.
Example (29 AUg NIFTY FUT Chart)
Trade Preparation
- Price is in an uptrend from previous day. It is marked as HH, HL in the chart.
- On 29th NF opend up, making a new high but failed to sustain there and fell. I immediately anticipated a pullback setup as long as price is making a low above 5260 (prev swing low)
Candle A
The candle just before the candle A shows weakness in bears with its long lower shadow and candle A itself formed out entry range. But subsequent candles fell more.
Candle B
This is the first green candle near 5300. The subsequent candles have also respected its low, but In 1 min chart you will see later that my proper entry setup is not formed.
Candle C
Candle C is the new high which is a lower high, so if next price is taking our Candle B's Low then the uptrend will be finished.
Candle D
At candle D my next green candle appeared at 5300 again making a double bottom. So this is not a simple pullback but a complex one with 1-2-3 reversal pattern.
Now after the sight of weakness I am switching to 1 min chart for looking at possible range and range confirmation which could not be possible near candle B.
Entry & SL
- Now to decide upon my entry and SL i have switched to 1 min chart.
- Firstly, the red circle in 1 min chart indicates no reliable range formation to trade on near candle B
- After candle D, next 2 candles are also green and have respected candle D's low.
- Near E, the red candle shows the traders betting on the downside. Here my range is formed to go long. As above E the short traders will be trapped.
- The red candle has also closed above the candle's low. So our trade assumption is still valid.
- Now once buy stop order is placed above the candle E i:e 5313, Once my buy will be executed, I wil put a Stop loss below 5300.
Trade Management
Price did hit my buy stop order, and SL is placed below 5300, The big red candle shows how short traders ran for covering their shorts. Once price reaches 5330 (T1) I moved my SL to breakeven. and my trade is secured
- After a new higher low, price rallied to make higher high, and my TSL is now below the new swing LOW formed.
@ Jain, Sorry brother, did not get much time last night. But as promised here is how I trade the pullback setups.
Regards
Taiki
Pullback is one of the setup which defines my entry in a trending market (uptrend/downtrend). For past few days this setup is giving me good signals and R:R as Nifty is in an uptrend as well.
I learned about this setup in Lance Begg's book, so again no new invention from my side, but this is how I have interpreted it and this is how I am applying it in my day to day trading.
Criteria
- To trade the pullback setup the very first criteria I look for is a tending price movement. 3 min is my trading frame. So price should be in a trend in this chart. (Taking example of an uptrend), Lets say price is making a higher high and higher low, when price takes out the previous swing high it goes higher and I just let it to make a new high and wait for a pullback.
- This pullback should not make the newer low at the same level or below the previous swing low. If the new low is below the previous low, then the strength of the uptrend is finished, I wait for a new trend/pattern to be established. And if the new low is at same level as the previous low, price is more likely to trade in the range and goes in sideways direction. But here I take the trade (TST of sideways range low) and my target stays at the recent high.
Rules
The two very basic rules I trade upon are
-Trade in the direction of trend
-Trade against the weakness
Pattern
(Taking example of an uptrend here )
- When pullback occurs, it is basically few red candles dragging the price down or a series of green/red candles that makes the price to go down and gives me a chance of entering at lower level.
- Pullback in an uptrend is a bearish order flow, and I wait for weakness to appear in the chart to trade against that.
- Weakness is confirmed by a green closing candle (in 3 min chart) which indicates the 1st sign of weakness. This is the point where I watch both 3 min and 1 min chart.
- The subsequent candles should not break the low of the 1st green candle to confirm the weakness. Sometimes there appears a green candle but the next candle becomes red and closes below the low of prev green candle. SO here the bears are still in control and weakness has not set it.
- 1 min chart gives me the range after weakness sets in, and I decide the entry level, SL from 1 min chart. 1st Target is the prev swing high. As price comes near the swing high I move my SL to breakeven, and wait.
- IF price is taking out the swing high more bullish order flow is likely to come and taking price to a newer high, else if any reversal pattern appears I consider scratching my trade.
Steps in Trades
- Trade development (An ongoing uptrend and a pullback)
- Weakness in Chart (A green candle close and subsequent candle should respect the low making a new higher low)
- Trade confirmation & Entry decision
Switch to 1 min chart after the weakness, no candles should close below the 3min green candle's low
Let the price forms a range in 1 min chart. This is nothing but a level of resistance where other traders would be betting for more downside.
I put a buy stop order above this range with sell SL staying below the low of the green candle
When the resistance is taken out, short traders will be trapped and will run to cover their position pushing price to go higher.
Example (29 AUg NIFTY FUT Chart)
Trade Preparation
- Price is in an uptrend from previous day. It is marked as HH, HL in the chart.
- On 29th NF opend up, making a new high but failed to sustain there and fell. I immediately anticipated a pullback setup as long as price is making a low above 5260 (prev swing low)
Candle A
The candle just before the candle A shows weakness in bears with its long lower shadow and candle A itself formed out entry range. But subsequent candles fell more.
Candle B
This is the first green candle near 5300. The subsequent candles have also respected its low, but In 1 min chart you will see later that my proper entry setup is not formed.
Candle C
Candle C is the new high which is a lower high, so if next price is taking our Candle B's Low then the uptrend will be finished.
Candle D
At candle D my next green candle appeared at 5300 again making a double bottom. So this is not a simple pullback but a complex one with 1-2-3 reversal pattern.
Now after the sight of weakness I am switching to 1 min chart for looking at possible range and range confirmation which could not be possible near candle B.
Entry & SL
- Now to decide upon my entry and SL i have switched to 1 min chart.
- Firstly, the red circle in 1 min chart indicates no reliable range formation to trade on near candle B
- After candle D, next 2 candles are also green and have respected candle D's low.
- Near E, the red candle shows the traders betting on the downside. Here my range is formed to go long. As above E the short traders will be trapped.
- The red candle has also closed above the candle's low. So our trade assumption is still valid.
- Now once buy stop order is placed above the candle E i:e 5313, Once my buy will be executed, I wil put a Stop loss below 5300.
Trade Management
Price did hit my buy stop order, and SL is placed below 5300, The big red candle shows how short traders ran for covering their shorts. Once price reaches 5330 (T1) I moved my SL to breakeven. and my trade is secured
- After a new higher low, price rallied to make higher high, and my TSL is now below the new swing LOW formed.
@ Jain, Sorry brother, did not get much time last night. But as promised here is how I trade the pullback setups.
Regards
Taiki
Last edited:
Trade Setup for 11 Sep 2013
30M chart
ON upside S/R lines are at 5960, 6020, 6080
On downside S/R line are 5830, 5760, 5700
3M chart
Price maintained its upjourney and touched 5900 and closed near day's high. A little pause/profit booking is expected after such strong rally, but no resisatnce is a resistance in an uptrend, so lets see what new levels price will touch today.
Global Index
US and EU markets gave strong closing, Asian markets are mized, with SGX Nifty trading at 0.29% down. we may see a flat to negative opening today.
Trade Area
1. BOF/BPB/TST at 5900
2. BOF/TST/BPB at 5960, 6020
3. BOF/BPB/TST at 5830
Regards
Taiki
30M chart
ON upside S/R lines are at 5960, 6020, 6080
On downside S/R line are 5830, 5760, 5700
3M chart
Price maintained its upjourney and touched 5900 and closed near day's high. A little pause/profit booking is expected after such strong rally, but no resisatnce is a resistance in an uptrend, so lets see what new levels price will touch today.
Global Index
US and EU markets gave strong closing, Asian markets are mized, with SGX Nifty trading at 0.29% down. we may see a flat to negative opening today.
Trade Area
1. BOF/BPB/TST at 5900
2. BOF/TST/BPB at 5960, 6020
3. BOF/BPB/TST at 5830
Regards
Taiki
Trade Summary for 11 Sep 2013
NF opened below yesterday's low and fell but as expected it maintained the sideways range in prev swing low and prev day's high.
Attempted 1st trade as a breakout pullback of sideways range on downside. Scratched this trade with minimum loss, Breakout failure of sideways range triggered my 2nd long trade. I was playing with fixed target as no expectation was there for a sideways range break. Exited the long at 5910.
Again a breakout failure on upside gave a downtrend. Could not pick the short from beginning. So waited for a pullback, Entered short when proper short opportunity came, Shorted at 5898, and covered at 5882, (Though my target was 5880).
After this lost interest in market for the dull movement and was lazy when the long triggered after the 2nd breakout failure, So could not pick this long, And no more trades were done after that.
Net 3 trades, 2 in profit and 1 in loss, Net gain = +38 points
Hoping for a better day today.
Regards
Taiki
NF opened below yesterday's low and fell but as expected it maintained the sideways range in prev swing low and prev day's high.
Attempted 1st trade as a breakout pullback of sideways range on downside. Scratched this trade with minimum loss, Breakout failure of sideways range triggered my 2nd long trade. I was playing with fixed target as no expectation was there for a sideways range break. Exited the long at 5910.
Again a breakout failure on upside gave a downtrend. Could not pick the short from beginning. So waited for a pullback, Entered short when proper short opportunity came, Shorted at 5898, and covered at 5882, (Though my target was 5880).
After this lost interest in market for the dull movement and was lazy when the long triggered after the 2nd breakout failure, So could not pick this long, And no more trades were done after that.
Net 3 trades, 2 in profit and 1 in loss, Net gain = +38 points
Hoping for a better day today.
Regards
Taiki
Trade Setup for 12 Sep 2013
30 M chart
On upside S/R lines are at 5950, 6000, 6060
On downside S/R lines are at 5850, 5780, 5700
3 Min CHart
Though NF was little choppy for morning session, it managed totake support at 5850 and rallied sharply for 5950. As long as price is sustaining above 5850 uptrend is still in the chart. We may see more higher levels beyon prev day's high.
Global Index
US and EU markets ended in green, Asian markets are mostly up except Japan, and Sanghai. SGX nifty is trading higher by 0.5%. We may see a positive opening in Nifty.
Trade Area
1. BOF/BPB at 6000
2. BOF/BPB/TST at 5950
3. BOF/BPB at 6060
30 M chart
On upside S/R lines are at 5950, 6000, 6060
On downside S/R lines are at 5850, 5780, 5700
3 Min CHart
Though NF was little choppy for morning session, it managed totake support at 5850 and rallied sharply for 5950. As long as price is sustaining above 5850 uptrend is still in the chart. We may see more higher levels beyon prev day's high.
Global Index
US and EU markets ended in green, Asian markets are mostly up except Japan, and Sanghai. SGX nifty is trading higher by 0.5%. We may see a positive opening in Nifty.
Trade Area
1. BOF/BPB at 6000
2. BOF/BPB/TST at 5950
3. BOF/BPB at 6060
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