Pump Coil Dump Day 1-2-3 USDJPYUSDJPY Reversal Trade.
Points to Notice
Day 1 - Sets the new week high and low. Establishes a new week closing price as a target for a day 3 setup.
Day 2 - Typically expands Mondays range in the direction of the underlying oder flow. This occurs as a pump/ dump leading to the Asia and London coil sideways.
Day 3- We take note of the previous day high and low to observe price going into the NY session. In this case Price gave signs of a coiling reversal into the evening setting up for the move below Day 2 closing price.
Ideally what you want to see in this template is traders faked into a breakout move in the direction of the pump. This can present as a candle close above yesterdays high or closing price.
After trapping traders in we see the change in order flow creating a new lower low. This is the confirmation to look for an entry at the previous days closing price.
We set a stop at the high of day 3 level or at the previous days high with a target at the previous days low. In extreme cases we may see a setup that expands to the LOW level.
THE ONLY IMPORTANT DATA POINTS.
- PREVIOUS DAY HIGH AND LOW
- CLOSING PRICE
- LOW HOW LEVELS
- DAY COUNT
MARKETS ONLY DO TWO THINGS
- BREAKOUT, FAIL, REVERSE
- BREAKOUT, RETEST, TREND.
ONLY LEVELS THAT ARE TRADED
- PREVIOUS DAY HIGH (STOP LOSS)
- PREVIOUS DAY CLOSING PRICE (ENTRY)
- PREVIOUS DAY LOW (TARGET) CMCMARKETS:USDJPY FX:EURUSD OANDA:USDJPY
