What Is 2618 Trade Entry Technique?

What Is 2618 Trade Entry Technique?

2618 Trade Entry Technique is probably the safest way to trade a double top or double bottom and although the Risk/Reward ratio is a little less favorable.

The basic concept behind this technique is that after a double top or double bottom formation, the market usually comes back to retest the structure before it finally resumes the originally diverted trend.

In double top formation the trend is downwards and in double bottom formation the trend is upwards. After the retest the market starts following these trends again.

2618 Trade Entry Technique
2618 Trade Entry Technique

This retest gives us a very good opportunity to get involved in the market. 2618 Trade Entry Technique is the best confirmation you can get in double tops and double bottoms.

The PRZ runs from 61.8 fibonacci retracement to highest high of the recent double top formation. In case of double bottom it is between 61.8 retracement and lowest low of double bottom formation. Hence the stops must be above double top highest high and below double bottom formation.

Few points to remember:

  1. This method has few disadvantages:
    1. The price may never come back to retest the PRZ
    2. Reward may be lower and risk higher because of confirmation in wide PRZ. So if possible we should wait for candle stick formations inside the zone to take a late entry.
  2. V formation and break:
    1. Double top and double bottom formation is only valid if a V (double top) or inverted V (double bottom) formation has been formed.
    2. We must use 2618 Trade Entry Technique only when the market has broken this V formation and has come back to retest the PRZ.

Have a great trading time

-TradeYodha

 

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