TWO LEGGED PULLBACK

A two-legged pullback to the 20-period exponential moving average is a 😳 high probability trade entry set up inside a strong uptrend for buying a dip in price action.

What???

It can also be a short selling opportunity on a rally back to the 20-EMA during a downtrend in price action.

Any candle that goes higher than the previous candle begins a new leg up in price.

Makes sense?

Any candle that goes lower than the previous candle begins a new leg down in price.

Trading rules for the two-legged pullback to the 20-EMA

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Dip buy signal

·        Strong uptrend

·        Two-legged pullback down to the 20-EMA

·        Enter at the close of the candle that bounced back from the 20-EMA

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Easy, right?

And what about the short signal?

Short sell setup signal

·        Strong downtrend

·        Two-legged rally back up to the 20-EMA

·        Enter on the candle that tested and was rejected off the 20-EMA resistance

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Continuation pattern trades work out as the trend traps counter-trend traders that fade the primary move in price.

Two-legged pullbacks are tempting entries to counter-trend traders to fade the primary move.

Read on...

On a trending chart, the two-legged pullback pattern to the 20-period moving average is a high probability trading setup entry before a continuation of the trend.

This is primary a signal for the daily chart but the principles can work on other time frames.