You can see the bounce at the 38.2% Fib. Traders obviously took profits there. I should too! One could re-enter the breach of 38.2% Fib and again just collect profits at the 50.0% Fib. You would need to be quick.
If I look at the 5″ chart there is a nice bearish engulfing tweezer top printed about 10:20. Coincidentally this would be profitable too. Two problems arise: 1) the 1-minute would have given you not only reversal pattern but also weight of evidence three minutes earlier and 2) it is a problem to play candlestick reversals without weight of other technical factors.
As I have seen, I won for a while not using weight of evidence but it eventually caught up with me. To think that you can play candlestick reversals in isolation goes against the market maxim: “the market will not give up its gifts easily”.
So in conclusion, I think I will use the eight (8) entry criteria in this model and see if I have better results in the fade strategy. Obviously I will have to wait longer for proper setups.
I wasn’t drilling down sufficiently into the one minute because I thought i was already looking at enough, given so many timeframes and so many market internals. That will not be enough to reap rewards in the future. I was so fascinated with candlestick patterns that I lost my perspective this last few days.
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