I just can't help it, I usually pull the trigger on those non-DS setups, knowing that I'll get dinged on my execution score -- simply because they are based on setups I've researched or taken over time and they just call out to me. Perhaps I should just update my trading plan to include these types of setups so they're not considered an exception?
I didn't have a formal name for this setup, but I'll just call it "Connect 2 and Extend", since it's based primarily on connecting two points and extending the trendline. It's relatively simple, although like nearly all setups, there is some "art" associated with it.
Here's basic recipe (generally works on all timeframes):
- Connect 2 significant swing highs/lows and extend the trendline to the right
- Look for points where the extended trendline intersects with another point of interest, such as a moving average, vwap, Fib, another trendline, etc.
- When the fast stochastics (8,3,3) is above 80 or below 30, and price is hitting the confluence of the extended trendline and at least one other support/resistance, enter at a price as close to the trendline as possible
- The stop is generally placed a tick above/below the trigger bar
- Profit target for ES would be +2.00 for the first target (or use whatever scaling out method that works for your style)
|ESM2 - 3/20/2012 - Setup view|
|ESM2 - 3/20/2012 - Results view|