Learn how to trade the first pullback in a new trend to make profitable trades. Look for lower highs, failed pullbacks, trend bars, and reversal patterns. Timeframe correlation is crucial in identifying the first pullback.

write 2100 words and add headings article based on this youtube script use 20 words in a sentence in maximum 25% of sentencesIf you want to be profitable trading market pullbacks, the best way is to catch the first pullback. The first pullbacks are the trend entries that can be found at the very start of a new trend. In today’s video we’ll explore the idea of trading the first pullback in a new trend And I will share my strategy to pinpoint the exact moment to enter the market. In an ideal situation, the most profitable way to trade the market is to catch the run from the very top and cash out at the bottom of the market. The opposite is also true if you catch it from the bottom and exit right at the top of the market. However, the nature of trading is such that we never really know where the top or bottom is. Above and beyond that, catching the top or the bottom of the market is probably one of the harder tasks and many traders have lost substantial amount of money while attempting to do so. Instead of entering the market at the top or bottom, the first pullback allows traders To enter near the top or bottom (as shown in this example), this is similar to entering at the top or bottom, and you can still enjoy the majority of the benefits. Hence, entering the market at the first pullback is the next best entry. Essentially, the first pullback in the new trend direction is also the final test of the extreme in the old trend direction. Understanding the final test of the extreme is fairly important when identifying the first pullback. Just to be clear, the first pullback is not a reversal set up. Instead, it is a trend-following setup that enters the market at a very early stage of the new trend – it is the first trend entry immediately after price has reversed. While many traders would be afraid to enter the market using this technique, smart traders Understand that this is a low risk and high reward set up. Now, let’s explore the concept of “first pullback in a new direction”. As we know, when the trend ends, it does not imply that the new trend would start immediately. So it is important to know what price action sings to look for when searching for the first pullback. Before we search for the first pullback, we need to analyze price action right before it happens. Using this example, the market is currently in an uptrend (which is the old trend direction). The first indication of a potential new pullback (in a new direction) is when you see the first lower high. This is because the lower high is a sign of weakness that shows that the buyers are not completely in control. This is also a potential final test of the swing high. Buyers are testing to see if they can move any higher. Meanwhile, the sellers are keeping a close eye, and once they know that buyers are exhausted, big sellers would take control of the market, and they would push price lower. However, the confirmation of the final test requires a lower low or, in this case, a break below Point C. When you have a lower high (Point C in this example) and when price breaks below Point C, the first pullback in new direction is completed. In other words, the easiest way to find pullbacks is to spot ABCD patterns. BC wave is the actual pullback but a pullback must include CD wave where point D moves beyond point B, or the pullback is invalid. The same applies here, price must move below Point B for confirmation of the first pullback In the new trend direction. Once you have a full cycle, the chances are higher that the market is now in a downtrend, and the chances are now slimmer for price to move upwards since the downward market has already started. Now, understanding the first pullback means nothing if you do not take any positions. You either catch the new pullback or you missed it. Truth to be told, there is nothing much you can do about it once you miss the pullback. Trading is all about preparation and the more you are prepared for it, the more you can grab a high probability trade. So in your analysis you must be able to identify some important signs for catching the first pullback. 1. First sign is that pullback fails in old direction A break below Point A represents a confirmation that a pullback in the old direction has failed. This is also the first lower low that we were looking for. While we don’t know what happens next, we can only wait for more price confirmation to show us if the buyers or sellers are taking the lead. Nonetheless, the only thing that we are certain is the old trend has lost its drive and that is an important clue to note. 2. Second sign is a trend bar showing confirmation of failed pullback in the old direction While a failed pullback is important, we need the probabilities to stack in our favour. Thus, in terms of price action, you want to see a clear break below Point A and one of the best ways to identify seller’s conviction is by finding one or more long bodied bearish trend bars breaking through point A. This is a strong confirmation that the pullback Has failed and the probability of getting a fake failed pullback has greatly reduced. Trend bars are great to show strength in the market, and you should look for them especially at the start of a new trend. They are very useful clues for trading success especially near price extremes. If the trend bar is longer than the average size bar, that is also a good indication of momentum and this is usually the start of a market rally (or decline). If you find that the trend bars have very small tails that is evidence that the market Is one-sided, and the momentum is increased further. 3. Third sign is related to time frame correlation When chasing the first pullback, you should try your best to understand time frame correlation. For example: – A price extreme at the hourly chart is more relevant when trading a 15 minute chart. A price extreme at the daily chart is more relevant when trading the hourly or the 4 hour chart. The time frame below shows you the pattern or the pullback that you are looking for. Looking at this example, you can see from the daily chart that price was very far away From the moving average line. This point is considered the extreme since it was at the point where it was furthest away from the moving average. However, there was no clue showing the lack of buyers until the first lower high on the 4 hour chart. Using the daily chart to identify the market extreme, you can then move to the 4 hour chart to pinpoint when price pullback fails in the initial trend direction. The first clue that the buyers have run out of strength is the price action double top – a final test of the extreme. Then, it was followed by a lower low. The confirmation of the first pullback in the new trend direction was when price broke below this bar. If you stayed on the daily timeframe, you might not have spotted the pullback and would have missed a good pullback entry. 4. Fourth sign is a the creation of a reversal pattern Since a first pullback is an early entry in a new trend, it should be no surprise that you can find many first pullbacks immediately after a reversal pattern. So, let’s explore some conventional reversal patterns. Just to be clear, the idea is not to trade the reversal patterns and it is important to wait for price to have reversed before looking for any first pullback entry. First pattern: double top/bottom and neckline pullback A double top pattern is a good and simple indication that the price has tested the extreme One last time and resulted in a final test, in the old trend direction. The double top is only a…

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