Keltner Band Fade..... This is a very simple trade setup that works very nicely on oscillation days. How do you know if its going to be an oscillation day or trend day? We'll we don't for 100% We do know that oscillation days follow strong trend days 90% of the time. That is, you vary rarely get to trend days back to back. The market needs a chance to rest and build up more pressure for another big move.
Rules- Get ready to use this setup after a strong trending day
- Do not use this setup on trending days or days ADX is above 30
- Add a standard Keltner band indicator to your chart with a setting of 20
- Take a short position when we tag the upper Keltner band then close under it. Do not take position if the candle sticks are closing over the bands.
- Take a long position when we tag the lower Keltner band then close above it. Do not take position if the candle sticks are closing under the bands.
- On oscillation days you should be able to do this 4-7 times. Don't go to the well too many times!
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Stop: The opposite side of the Keltner band or a custom stop your comfortable with
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Target 1: A good place to take profit is at the mid line of the BBS. Large contract traders scale out along the way starting at +5 Then you may trail for the other opposite side of the Keltner bands.
Cautions- This type of trade does not work well on trending days!!!!!!!!
- If Keltner band range is very large, wait for it to narrow or use a smaller stop
- Always insert a catastrophic stop
