Retracement entry strategy

Rather than time reversal, a much more probable and less risky setup is to enter on retracements. From the above YM graph, see that the price is in a downtrend already from the 50MA (gray dotted) below 200 MA (white dotted) lines in plot1.

The first vertical line denotes setup #1 for the retracement shorting opportunity. Note the following:

1. price is just above Keltner Channel
2. CCI stopped rising from above 100
3. Stochastic Slow crossing below signal line

The second vertical line denotes setup #2, which may be weaker because of fewer indicators alerting.

1. Stochastic Slow crossing below 80 and just crossed signal

P.S. A 200/50 MACD Histogram could replace the 2-line MA’s for easier reading. And use slowing CCI as confirmation of Stochastic crossing 20 or 80.

Update: This is actually a reversal strategy and not retracement. Retracement shouldn’t end up on the other side of the Keltner channel. See this newer reversal strategy for a new adaptation.

Related posts:

1. Short term retracement with stochastic strategy
2. Day-after-95-point-rally-retracement still looking good
3. Day trading YM day 2 and revised strategy
4. SCSC short entry stop $21.40, buy exit stop at $22.70
5. TRIN and support/resistance day trade strategy