With thanks to ICT Michael J Huddleston, TraderSZ and Midge Drangonflyfx.
Here you can see the inner workings of trading a reversal.
The strategy can be summarised in this way:
High Time Frame Order Block.
Daily Highs and Lows.
A Breaker will be used to sweep daily High.
Price will come back to /HTF and Breaker Order Block and retest.
The market will often provide several entries.
Price should break short term lows, but ideally not daily lows yet.
Fibonacci levels (in this example) show the sweet spot 70.5% Optimal Trade Entries ( OTEs ).
Market then breaks structure, breaking through significant daily lows. Some traders would call this a breakout, but we are already onboard.
In this example the market then offered again many trade entries, based on the next breaker it formed to break more daily highs. (See purple line).
Reward:
If you had of spotted this correctly you would have made 111 Pips.
If you missed it but still got onboard at the final opportunities (purple line) 59 pips.
Risk:
Not including spread one could have used a 10 pip Stop Loss from / OTE .
What happens next:
Ultimately we could be targeting the final series of daily lows to be broken. 1.07960. But then we have a giant void below us :)- As a rule I would only target a max of 200% of Fib Extension. And usually most profits are taken well before that. In this case the 200% extension would actually just about fill in the giant void below us.
GLGT.
Thank you to everyone who has ever helped me with my learning. All credit goes to you.
Whilst I have written each acronym here in full, if you don’t understand what they are you need to do your homework and watch ICT’s videos on his web site, they are all completely free – 40 hours of them.
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