20200924 Sharing my set-up for an earlier entry into shorting the DOW

There’s been lots of chat about the big falls in the US Indices yesterday, and to be true there were some great moves.

However some of us were already short US Indices from an earlier opportunity. Those of you who attended the London Traders Forum a couple of years back will have seen me present on how I planned to trade through any upcoming correction – Apocalypse Now. In that presentation I outlined what type of set-up that I was looking for, which you can see on the DOW chart attached. It’s a very simple set-up that I share with you here.

  1. Having been in a clear trend the market then prints a reversal signal (in this case a Key Day Reversal)
  2. Price falls lower and is supported by the 50MA.
  3. Price then rallies but is capped by the 20MA, which has now turned from support to resistance (PO20) and then prints a rejection candle. This is your trigger to go short

Price has now also printed a 123 Pattern and also a lower high to give even more confirmation. Short at 28090, SL @ 28380, targeting 26390 (in front of support and 200MA)

Nothing special there, just a simple trade plan. The problem with this set-up is that it doesn’t happen very often (though similar set-ups happen on intra-day markets all the time.)

And for those of you who’ve forgotten the set-up or would like to see the slides then, as I’m a good guy, you’ll find the slides from that presentation here: Paul Wallace Apocalypse Now – Trading through a coming correction.

Trade well, and let me know what you think.


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About FXTraderPaul

A professional Trader and Coach, FXTraderPaul blogs about his adventures from the front-lines of FX Trading. A Trader and educator who can walk the walk as opposed to merely talk the talk!

View all posts by FXTraderPaul


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