This play is my bread & butter play for a number of reasons. First of all is the obvious 3+ Convergence of

1.) Negative Trendline Break (TL-)
2.) Negative TRIX Divergence (TXD-)
3.) 2nd Negative NYSE-TICK hook (2nd TCKH-)

If you’ve been following my blog for any period of time you know that when I get 3+ converging factors on any play, my win rate is over 80%.

The other thing I love about this play is that it gives a clear and concise signal when it fails, thus no guessing or human error enters the equation. After entering the trade, simply place a stop above the most recent pivot high and if it gets hit then the pattern failed. Its that simple. No ifs, ands, or any room to shoot yourself in the foot. Stop hit, get out.

The only difficulty is in trying to figure out where to set your profit target. I’ve found that I can easily get a 2-tick scalp out of this setup but usually this is way undercutting the plays potential. I’m still working on the optimum target, but in the end a lot just depends on the overall environment in which the play sets up and how the markets are doing on the other timeframes. I took a mere 2-ticks here on this play, not because I thought that’s all I could get but, quite frankly, becauase I was scared of the One-More-Trade Curse and wanted to hit my Net Daily Goal and be done with trading for the day. So aside from feeling a little more yellow, I don’t have much to complain about :-D