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.