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Hopefully this will make more sense.
Went short at 12:42 MT at 1452.75
I saw a potential top on the 5 minute chart, the second red candle you see was where I went short as I viewed it as confirmation. Shortly after the tape slowed, and price went higher where I eventually got out at 1454.00 for a 1.25 ES loss. |
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Hi James,
Thanks for the clarification.
Taking a second look at the price action of your entry...there's
no valid candlestick pattern to prompt a trade entry.
However, I do see two consecutive
Hanging Man (Hangman) candlestick lines but the low price of the first Hangman line (green) failed to test the mid-body range of the prior candlestick line.
The second Hangman line (red) did not close > close of the prior Hangman (green).
Also, the best Hangman Lines to trade are the ones involved in Close of Dark Hangman (red) > Close of the prior White Line (green) or Open of White Hangman (green) > Close of the prior White Line (green) or Open of the prior Dark Line (red).
Simply, it's involved as a GAP strategy which also implies it's one of those particular candlestick price action that's mainly suitable for higher chart frames.
Yet, as I hinted above, I also like to see the low of the Hangman test the mid-body price area of the prior candlestick line (preferrably a
wide range body line) especially when the prior candlestick line is not a Hangman to tell me that the price rise is showing true signs of exhaustion (profit taking occurring) in comparison to when existing Longs sitting (not taking profits) in their positions waiting for new buyers to show up to take it higher...
Especially in price action where the Hangman is involved in a price action that's acting like a higher high in comparison to the prior swing point.
Last of all, my favorite Hangman variation involves price action where its a lower high in comparison to the prior swing point.
This type of price action also makes it much easier to manage a losing trade if the trade breaks to the upside prior to the stop/loss being hit via allowing me to look for position reversing (reversing the trade from a short into a long) opportunity.