GBPUSD: How To Spot This POWERFUL Setup Like We Did! +350 pips

٢٥ أبريل ٢٠١٨

Psssttt!!! Want to know how it is that we caught this BIG drop down and are now in profit over +350 pips? Yes? Then read on! This setup does repeat itself A LOT! If you can spot it, maybe you can bank pips like my subscribers and I do!

First, you need to know in what wave are prices in. If you look at the Daily chart, you see that I marked off that BIG move up as a 5-wave which could turn out to be a wave (1) or a W. For now, that isn't important. Only that the current move up is impulsive which wave 1's and W's both are. If you take a close look at my overall wave count for that impulsive move up, you will notice that where prices are now is all part of a final wave (v) of that possible (1) or (W). And within that wave (v), prices completed a strong wave iii which formed the first peak of a double top. Of course we didn't know that it would become the first peak of a double top at the time that wave iii completed. But that also doesn't matter to this pattern to know that yet. So from that wave iii peak prices dropped and that drop was corrective so we could guess that the wave iii ended. But after that drop, prices began moving back up reaching the same price level as that wave iii peak before. At this point, could you tell that it was going to be a double top? Of course not! In fact, at that time, this is how I was looking at it:

But because at that moment, prices were needing to break over the resistance formed by the wave iii peak, that wasn't a time to BUY or SELL! It was a time to sit and watch and be PATIENT! So we waited and 3 days later, this is what happened. Lo and behold...a POSSIBLE double top was forming:
This is the way it looked on the 4HR chart at that time.....a very good probability it was a double top! :

Now when I saw this on the 4HR chart, I knew with high confidence that my count was wrong and I had to adjust it to this one which makes it a flat wave iv:

Now here are the 2 "ingredients" to this setup that you need to know in order to trade it:
1. that prices are in a correction (which this is)
2. a SOLID double top is in place on the Daily TF and confirmed on the 4HR TF (which at this point although not confirmed is nevertheless already there. Make SURE you know what the rules of a double top are!)

Why this works?

When you have a double top, almost 100% of the time, they appear during CORRECTIONS and ARE NOT a signal that a complete reversal is at hand but rather only a retracement is coming. Why is this? Because if you know wave counting, truncated wave 5's are exceedingly rare and if you have a impulse wave (which we do here), in order to have that wave 5 end on a double top, it would need to be a truncated wave 5. So since they are so rare, odds are that the double top DOES NOT represent the end of the impulse wave but rather just part of a correction within that impulse wave. So that is why when I see a double top, I'm thinking a wave 4 most likely. Much more common in wave 4's than 2's since 4's are much more likely to be a flat. Oh yeah, double tops appear in flats. not zig zags.

Ok, so we now have a double top in a wave 4 correction. Well, if you look at my previous chart above, you will see that in order to have that wave 4 correction continuing, that means that (in this case) the waves (w) and (x) have already completed with that second peak being the end of the wave (x). Well, guess what follows a wave (x) in a correction? That's right! An IMPULSIVE wave (y)! That means that off of a double top, then next move should be a strong one and of course, it was! And that is how this setup works! It happens over and over again! If you know what to look for! I just told you! Hit me up if you want to learn more! Follow me on my Facebook group and/or Twitter below.