1d:3m (1,2 Futures Trades Short Trend Reversal)
- At the beginning of the day we created a lower high right at open then we made a lower low. When that occurs we should expect continuation to the downside UNLESS we make a new higher high because that would signal that the uptrend is going to continue. We got exactly that right at 9:45am ish and after that new HH we pulled back into the 8. 21. 50. moving averaged and VWAP then rocketed higher to a new higher high. There were multiple trend continuation trades long in this sequence but I took none of them and instead I ended up shorting the move 2 times and losing back to back. I need to understand when the momentum is here.
- All of these trades are trend continuation long where you can enter on the break of the 8 and have the stop at the 50. As long as you are above the 8 you hold the trade for continuation.
- See here how we have the 8 and the 21 cross? The price action is BELOW this cross and then we get a nice trade entry where we break through the 50ma and then we pull up and use it as resistance and head straight down to vwap without touching the 8ma at all.
- If using this strategy for trend reversals be careful because here are 2 examples earlier on in the day where we did cross the 8 and the 21 and we just continued a lot higher. I think this is a good reason to take the trades still based on an even larger moving average like the 50. In the example I said up above I said the pullup to the 50 is a good entry to get in and hold for continuation. I didnt say enter right when the cross occurs. This will surely fake you out multiple times. Need 8 to break 20 and pullup or pullback to 50 and then that is an interesting trend reversal strategy.