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The Core Components of My System

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The Three Core Components of my System: The Constant Research of the Best Confluence

In the past few weeks to months I've spent a lot of time sharing examples of what I believed to be the best setups in term of confluence - and what it means in my system. My main goal doing so is for you guys to have "simple" checklist to have when browsing a chart and looking for setups.

I have a very simple approach when it comes to trading: I want to have the better understanding possible of the strength/weakness of current trend (doesn't matter the TF, from 15 min to D1/W1) and cycle we're in.

Already discussed this multiple times but I tend to think moving averages in their structures are very good indicators for that. I have already made educational content about what I often refer to as "the trend" = the 13/25 EMA couple. With experience I can tell this couple of EMA is a very strong indicator of short/mid term trends from 15 min to D1.

Over the past few months, focusing on these "trend reclaim" or "trend retest" we managed to spot early almost all ETH/BTC reversal (on LTF -> 15min to H1) and BTC entire trend as D1 trend has been intact from 10.5 to 33k and then reclaimed from 35k to now (51k).

Recent LTF PA on Bitcoin (time this content is written is Feb 2021) has been another perfect example as you can see on this chart - BTC/USDT - H4 - Feb 2021

What do I look for in order of priority when looking for a setup?

1) Horizontal S/R flips and/or pivot

2) Trend (13/25 EMA)

3) Stoch RSI at cycle low.

If/when you get the confluence of the three, you often get a VERY clean invalidation.

Stoch RSI only comes 3d as a confirmation of the above and tool to time entries best way possible.

Stoch RSI settings I use are "Binance default" settings = K 3 ; D 3 ; Length RSI 9 ; Length stoch 14 ; Close

Some great examples

In downtrend H4 trend retest based setup=

  • ●Entry = as close as possible to H4 trend + horizontal retest and ideally overbought
  • ●Invalidation= above confluence
  • ●Target #1 = previous lows

In uptrend H4 trend retest based setup=

  • ●Entry = as close as possible to H4 trend + horizontal retest and ideally oversold
  • ●Invalidation = below confluence
  • ●Target #1 = previous highs

Why the importance of overbought/oversold?

Because in terms of momentum it's a good a way to gauge H4 trend strength

  • ●In downtrend = if we bounce without reclaiming any significant Horizontal level or break/reclaim trend while getting to overbought == weakness expecting downtrend continuation
  • ●In uptrend = if we retrace without losing any significant Horizontal level or break trend while getting to oversold == strength expecting uptrend continuation

This is all you need, take your time and try to find these kind of setups.

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