Pullback, how to manage day trading

The pullback, live day trade mid-afternoon 21st February 2018.

Pullback, entry

The bear trend for the morning had hesitantly reversed to form a robust bull recovery. In the chart below, bar 1 is a 17 pip bull bar. Are we likely to go higher or is this the final bar before a pullback?

We consider that we are not at a point of significant resistance and with no apparent signal that bar 1 is a final bar. We enter long at the upper green arrow and scale-in at the midpoint of bar 1.

The following two leg pullback anticipated. However, we’re uncomfortable with bar 3 even though it is still above the open of bar 1. We accept a pullback not beyond the second fib of bar 1.

Pullback, exit

We set an exit for both entries at the first entry point, a breakeven for the first entry and a small profit for the second.

A day trading a pullback entry long in a bull trend
Pullback example 1


Breakout entry

We’re out of the trade with bar 4 above. The close of bar 4, however, provides another excellent ‘day trading example’ entry, this time a breakout. We have sold our long, but the end of bar 4 offers a new proposition. We take it, entering long, again. As we see from the chart below price rapidly moves to our measured move target. We exit from our single entry for a gain of 21 pips.

A pullback entry provides less risk but presents a trader with a dilemma. Is the entry a pullback or a reversal. A clear strategy of criteria assists our decision process.

That last bet looks simple. But if we view the same trade from the one-minute perspective below, we see the rapid up and back of the deal. Holding, in reality, was like staying on a bull in a rodeo ride. We need to set our target, grit our teeth and ‘hold the line’.

Successful day trading a pullback can provide a breakout opportunity
Pullback example 2 with a breakout


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