AAPL (Apple Inc):
We spotted this setup on the weekly timeframe.
The price was trending up. It made a break of the resistance area, followed by a pullback.
As the price approached the now support area, we saw multiple long wicks rejecting the area. That gave us a potential trade setup long. We started looking for timeframe confluence on lower time frames.
On the daily timeframe, the timeframe confluence was confirmed through a double bottom pattern. That gave us a long bias on the daily timeframe as well and with that we went down to the 4h timeframe.
On the 4h timeframe, as you already know, we draw in our trendline. Our timeframe confluence and with that, our entry was confirmed when the price broke and closed above the trendline.
We ended up closing out this trade when we saw it couldn’t break through the next resistance area. It bounced once, and when it bounced for the second time, we took our profit. We ended up with a nice 3.7:1 trade.
Our next example is GILD (Gilead Sciences, Inc.):
This is another setup that we took from the weekly timeframe and is still an active trade at the time of writing this strategy.
We saw the price approach a strong S/R area. As the price was approaching it, it formed small body candles showing a loss of momentum as well as long wick candles rejecting the area.
That gave us a potential setup for a trade short.
Remember, these are handpicked trades that we took. You won’t get trades with this crazy ratio all the time. But they are trades that happen and are possible to catch with this strategy.
Next, we want to confirm that short bias from the weekly on the daily chart.
That bias was confirmed when we had a lower high form. In an uptrend, that is a bearish pattern showing that bears are taking control.
And finally, our 4h timeframe.
Here we, of course, draw in our trendline. After we’ve done that, we wait for our timeframe confluence to get confirmed through a strong break and close below the trendline. When that happened, we entered right on the candle close.
As mentioned before, this is still an active trade at the time of this writing.
