5-Minute Red Line — Continuation Trade

[jacktrades]

Red Line: 21 SMA from the 5-minute chart, plotted on the 1-minute chart.

After the market open and any news, as the market calms down around 10:00 it will usually pick a direction.

Continuation Trade — After 10:00

This trade works well but doesn't present very often.

1. Donchian Channel high/low

Look for a Donchian Channel high or low before the pullback.

2. Relatively smooth pullback to the Red Line

The pullback should be relatively smooth, but it is not as restrictive as the Gold Line continuation trade.

There is a long way for price to travel from the Donchian pierce all the way back to the Red Line.

Price is "seeking support" at the Red Line.

3. Entry

Enter on the break of the pierced candle in the direction of the trade.

4. Cancel the trade

Cancel the trade if the candle's open/close body and wick move completely above/below the Red Line opposite the direction of the trade.

5. Price should come to the Red Line

You don't want the moving average to come to price. You want price to deliberately move to the moving average (Red Line).

These notes are intended as a reference for those of us already following and trading Bob's strategy.

Please add your own observations, trade examples, charts, or questions below. If you think any of these rules don't accurately reflect how Bob teaches the Red Line continuation trade, post that as well so we can discuss it.