Exhausting market trade entry checklist

USE THIS TRADE SETUP ONLY IF THE MARKET IS REVERSING from support or resistance AFTER A SUDDEN AND SHARP MOVE WITH HEAVY VOLUME

Bounce setup

Bounce is an exhaustion based trade setup.

Bounce long takes place after heavy selling at a support Memory or deep Watermark level. After such capitulation, there may not be any seller left to push the price down. And the path of least resistance is upward. Even low volume buying may press the price up, at least enough to take a profitable short-term trade.

The reverse scenario takes place during Bounce short where price reverses from resistance after a sudden and sharp move up accompanied by heavy volume.

Bounce trade signal has no requirement on the weekly chart. You can identify it from only the daily chart signals.

For Bounce trade, profit may be booked either once the profit equals the risk amount or when the market reaches the next Direction Line, Memory or Boundary line.

Trade entry is to be taken only if potential reward (distance between the entry price and initial profit target) is at least as much as the potential risk (distance between entry price and the initial stop.

USE THE CUE HOP ON (NON-TRENDING) TEMPLATE FOR THE DAILY CHECKLIST AND THE CUE BACKDROP TEMPLATE FOR THE WEEKLY CHECKLIST​

Daily chart pattern

Daily candle shape

Daily Relative Performance

Activity color

Activity level color *

Daily Reward Risk Ratio

Reversing from Memory or Watermark after sudden drop

Hollow or with long lower tail

Ascending

Green

Cyan or green

At least one or more

Reversing from Memory or Watermark after sudden rise

Solid or with long upper tail

Descending

Red

Cyan or green

At least one or more

* Activity level color is to be matched at the current reversal point.

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