Here is how you can plan your trading setups or what you can also call different trading strategies.
Plan 1: Strong Rise and Reversal/Recovery
What does it look like? A sharp rally followed by a sudden peak and then a steep decline.
How does it happen?
• FOMO buying quickly pushes the price up.
• Smart money sells into this strength.
• The price quickly reverses and breaks below support.
How to trade?
• Avoid buying the peak.
• Look for a return of the price to previous demand/support levels.
Plan 2: Consolidation then Breakout
What does it look like?
A strong upward movement, then sideways or consolidation, followed by a breakout.
Why does this happen?
• The market cools down and accumulates.
• Buyers and sellers shake out in the range.
• The breakout suggests a new buying momentum.
How to trade?
• Look for a breakout from the consolidation area.
• Buy the breakout or the retest.
This is the ideal setup for trend continuation trades.
Plan 3: Breakout and Retest
What does it look like?
The price breaks above resistance, pulls back, and retests the breakout level.
How does it happen?
• The initial breakout occurs.
• Traders take profits, causing a pullback.
• Buyers defend the breakout level (new support).
How to trade?
• Buy the successful retest (when the price remains above the previous resistance).
• Safer than buying the breakout itself.
• This often leads to strong continuation.
Good luck & Keep learning
