Price Action
(Reversals)
Embedded Files
This is by far the most useful strategy that I use to make my trade assessments day in and day out. Here are a few reasons why I use this strategy and other strategies that I use to confirm an entry and exit.
Why I Use this Strategy
Price reversals can be a quick and easy way to get in and out of a position
You have a clear entry point and several exits for taking profit or cutting your losses quick
You have a timeframe on the reversal you are playing; this can be useful if and when you get into options (covered calls, longs, and shorts)
Other Strategies that Confirm My Entries
Moving Average Cross - 8MA/21MA and 8MA/50MA
Support and Resistance - Zone/Consolidation Blocking
Price Action - Price and Volume Analysis
Sara Strat Sniper 50% Rule
Sara Strat Sniper 50% Rule
Teaches Price Action and the relationship between candlestick movement and timeframes
One of the best explanations in terms of finding reversals in the market
Entries and Exit Points; Risk vs Reward
Can be used in conjunction with other long/short plays to determine exit points/profit taking
The Strategy Rules
The Strategy Rules
Live Candle MUST take out 1 side of previous closed candle
Live Candle must retrace 50% of previous closed candle
Target is the other side of previous closed candle
Stops/Exits
Stops should be 50% of the trigger candle for a tight stop
Exits at the height of trigger candle
Full Time Continuity
Full Time Continuity
Targeting the best setups only using Full Time Continuity
Yearly, Monthly, Weekly, Daily, Hourly trending in the same direction
Using your timeframe to get in and out
There are two methods for determining the direction of the market across multiple timeframes
Trendlines
The simplest method is to look at the direction of the stock using the 200MA on each timeframe
Since larger time frames take longer to change than shorter timeframes you could focus on lower timeframes to confirm continuity on shorter terms
Monthly is down, Weekly is up, Daily/4-Hour/1Hour are up: potential bullish play
Monthly is up, Weekly is up, Daily/4-Hour/1-Hour are down; potential bearish play
In general, if Daily, Weekly, Monthly, and Yearly are all in line you should see fireworks on shorter time frames.
For conflicted continuity where the largest timeframes are not in line with lower timeframes, we can ride the trend on a short term basis; depends on the largest timeframe selected.
By Timeframe
In this method we are looking at just the previous candle to determine whether we are bullish or bearish
Determine the closing of the previous candle and assess whether you are above or below the close
> close means you are bullish
< close means you are bearish
Broadening Formations
Broadening Formations
Covers why breakouts are not always breakouts
How to target new lows or highs
Live Trading by Sara
Live Trading by Sara
Shows LIVE intraday trading on 5 minute
Utilizing pullbacks to enter and previous lows for exits
Check Yourself
Check Yourself
Three types of candles (1, 2, 3)
Covers the charts
Broadening Candles
Full time Continuity
General Notes:
Remember, reversals need to have candle take out either a high or low; the more that are taken out from the previous candle, the more likely the next candle will see exhaustion and a potential reversal.
Use price action to recognize better setups.
Beware of inside candles that have long wicks/shadows in the direction of the reversal. It has already shown that is has trouble pushing in that direction earlier, the second time will not be any easier
Larger time frames are more prevalent than smaller time frames, but smaller time frames dictate changes to larger time frames
Be aware of your time frame with this strategy (Monthly, Weekly, Daily)
Are you close to the end or beginning of the week when the 50% retracement has occurred?
If you at the beginning of the week, there is a better chance it retraces to the other side.
If you are at the end of week, it is less likely that you will be able to retrace the enter candle and will need to confirm on the next live candle.
Always dial in on a lower time frame to find your entry and exit points (e.g. using a Weekly time frame you may use the daily or 4-hour, 1-hour candle, or 10/15 minute candle to confirm entry.
GOOG Example
GOOG Example
This is an actual example of trades I placed based on this position
Should have made substantially more had I zoomed out to see the bigger time frame
Remember two things about trading
We will always leave money on the table regardless of how good we get
Our main focus is to minimize losses in trading
One of my entries I stopped out early by setting too tight a stop loss (I made $6 on a quick pullback, when it would have made me $300-400); but the main thing is that I did not lose money on the play (REMEMBER THIS WHEN YOU GET STOPPED OUT EARLY). I may make an adjustment to my stop loss plays in the future.
Walked away profitable on a similar trade on this move down.
GOOG Example
Pictures of GOOG (Google) on the 15 Minute, 30 Minute, and 1 hour timeframes; nothing substantial on the Daily or Weekly
The main thing in this diagram is understanding the importance of seeing multiple time frames without getting too caught up in the shorter time frames and not getting trapped in a long time frame when we are playing intraday
You should already see several entries on the 15 minute and 30 Minute; 1 hour did not have any clear entries
15 Minute Chart
15 Minute Chart
We can see the first second red candle (2) that tested new highs and price rejected
The second red candle tested the low of candle that took out the new high, but quickly rejected
Our entry was on a push down below at $2283.13
Our exit could either be tight or the standard
Our targets are 2267.27, 2261.22, and 2256.61
While the targets typically hit the mark to test supply and demand, note that sometimes it can reverse before hitting
If you held 10 shares of TSLA, you could sell 5 shares at our first target and move our stop/exit to just above the candle that hit our target so that we end in a profit should it pullback. At this target we may choose to hold and not sell since the green candle on small volume produced no significant candle.
At our second target, we could either hold or sell a few (2) more shares to take profit.
At our last target we could sell a few more leaving one share to let our runners run.
Why you may want to exit at target three is the large volume bar and a small 15 minute candle which does not represent large volume; look at the previous volume bar and candle.
Total Profit from all ten shares
5 shares at $15.86 for $79.30
2 shares at $21.91 for $43.82
3 shares at $26.52 for $79.56
Total = $202.68
If you played 3 options and sold one at each of the profit points, you could have easily made close to $2000
30 Minute Chart
30 Minute Chart
Here is an example of seeing the 15 and 30 minute charts to find your entries and exits
After our quick run down for profits, the market bounces and we then are given another opportunity to jump back in at 2263.68
We have our take profit at 2255.10 and 2241.78; there was another exit that was similar to the bottoms at the 213 combo
This is where it can be tricky as we need to be aware of double bottoms and double tops which could represent areas of buyers and yet another bounce. However, on this day we had a premarket low of 2232.15 and a intraday low around 2245 which should ease your worries and allow us to go for our next target which is hit with the next candle down.
This timeframe is a preference and I often do not have this on my screen for trading. Personally, I use the 15 min, hourly, daily, weekly, and monthly charts actively in my trades. On a few occasions I will use the 30 min, 5 min, or 4 hour to confirm volume or to time an entry/exit.
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