The 5 Proven Strategies

Setup: After a 5–10 bar extension away from the 20-period moving average, price returns to touch it for the first time. The first contact candle closes back toward the average rather than continuing through.

Trigger: Enter on the close of the candle that touches the MA and closes in the direction of mean reversion. Stop sits 1 ATR beyond the wick that touched the MA.

Target: The previous swing high/low before the extension began — that's where buyers/sellers from the prior leg sit.

Why it works: The 20-MA is the most-watched mean by short-term professionals. First touches after extension trigger high-probability mean-reversion as institutional liquidity providers cover.

Best time: 10:00–11:30 AM and 1:30–3:00 PM. Avoid: trending opens (9:30–9:45) and the last 15 minutes.

Setup: A candle prints a wick that is at least 2× the size of its real body, piercing a key level (prior day high/low, round number, VWAP, prior swing). The body closes near the opposite end of the candle's range.

Trigger: Enter on the break of the rejection candle in the direction of the body close. Stop just beyond the wick extreme.

Target: The opposite end of the prior consolidation range or 2× the wick distance.

Confluence: Best results when the wick rejects at: prior day high/low, weekly high/low, opening range high/low, or whole-dollar levels ($100, $200, $500).

Risk: Skip if the next candle re-tests and breaks the wick — that's a failed rejection and a continuation signal.

Setup: A wide-range candle (1.5× the average true range of the past 10 bars) prints on volume that's 2× the prior 20-bar average. The very next candle reverses direction with a body that closes back inside the climax candle's range.

Trigger: Enter on the close of the reversal candle. Stop beyond the climax extreme.

Target: 50% retracement of the climax candle, then trail.

Why it works: Climax volume marks capitulation — the last buyers/sellers exhaust themselves. The reversal bar confirms supply/demand has flipped.

Critical filter: Must occur into a liquidity zone (prior day high/low, round number). Random climaxes mid-range fail.

Setup: Use Bollinger Bands (20, 2). Price closes outside the upper or lower band for 1–3 candles, but each successive close moves less beyond the band (decreasing momentum).

Trigger: Enter on the first candle that closes back inside the band in the direction of the middle line. Stop beyond the recent extreme.

Target: The middle band (20-MA). Optionally trail to the opposite band on momentum.

Tip: Combine with RSI divergence — RSI making lower highs while price makes higher highs (or vice versa) at the band edge dramatically increases probability.

Setup: Identify nearby round numbers ($100, $150, $200, also $X.50 levels for low-priced stocks). Watch for price to approach within 0.5% and stall.

Trigger: Two consecutive candles that fail to break the level by more than the spread. Enter on the candle that closes back away from the level. Stop 1–2 cents beyond the level.

Target: The next minor support/resistance level or 1× the distance from the recent swing.

Why it works: Stop orders, take-profit orders, and option strikes cluster at round numbers. Failure to break = supply/demand imbalance at those orders.

Best on: Stocks priced $50–$500. Lower-priced names use $1 increments; higher-priced use $5 or $10.

Setup: Strong trend in place — at least 5 bars of consistent direction with higher highs/higher lows (or vice versa). Pullback retraces 38–61% of the impulse leg AND volume on the pullback is visibly lower than on the trend.

Trigger: A momentum candle in the original trend direction with a body that's at least 1.5× the average pullback candle's body. Enter on the close of that candle. Stop below the pullback low.

Target: The prior swing high/low (1× extension) or 1.272 Fibonacci extension of the pullback.

Filter: Skip if the pullback is on rising volume or breaks the 21 EMA on a closing basis — that signals trend weakness.

Setup: After a strong impulse (pole), price consolidates in a tight channel with parallel support/resistance lines. Channel duration: 4–10 bars. Range contracts as the flag develops.

Trigger: Close beyond the flag's resistance (long) or support (short) on volume that's at least 1.2× the flag's average volume. Enter on the breakout close. Stop just inside the flag.

Target: Measure the pole length and project it from the breakout point — the classic flag-pole target.

Tighter version: Trade only flags that form on the upper third (long) or lower third (short) of the daily range — these have the highest follow-through.

Setup: Price was above VWAP, lost it, traded below for at least 3 candles, then closes back above on a strong candle. (Or mirror for shorts.)

Trigger: Enter on the close of the candle that reclaims VWAP. Stop 1 ATR below VWAP.

Target: The high of the day (long) or low of the day (short).

Why it works: VWAP is the institutional "fair value." A reclaim signals algorithmic re-entry from below to above the institutional average.

Edge: Best in the 10:00–11:30 window after morning shakeouts settle.

Setup: Daily or 4H trend is up. On the 5-minute, price pulls back to the 50-period MA which equals the daily 9 or 20 EMA on a multi-timeframe basis.

Trigger: Bullish reversal pattern (engulfing, hammer, inside bar break) on the 5-minute touching the higher-timeframe level. Enter on the trigger close.

Target: The most recent 5-minute swing high.

Why it works: Multi-timeframe confluence concentrates institutional orders. The trend-aligned pullback finds support exactly where larger players are programmed to add.

Setup: A trendline drawn through 2 prior swing lows (uptrend) or highs (downtrend) gets tested for the 3rd or 4th time. The more touches without breaking, the stronger.

Trigger: A reversal candle (hammer, engulfing, inside bar break) at the trendline. Enter on the close. Stop 1 ATR beyond the trendline.

Target: The most recent swing high/low or 1.272 extension of the recent leg.

Critical: If the bounce fails (close beyond the line), the trade flips — the trendline becomes resistance and you can short the failure (or vice versa). This is the "Bull/Bear Trap" archetype.

Setup: Identify a clear swing high or low where retail stops obviously sit (1–2 candles' worth above/below). Price spikes through that level on a momentary surge then reverses within 1–3 candles.

Trigger: A candle that closes back inside the prior range after the stop-run. Enter on that close. Stop beyond the spike extreme.

Target: Opposite end of the prior consolidation, or measured-move extension.

Why it works: Smart money harvests retail stops to fill their own larger orders. Once the liquidity is taken, price reverses to its "real" direction.

Best context: Reversals at the highs/lows of consolidations during morning chop or before a major news catalyst.

Setup: A breakout candle closes beyond a level on what looks like good volume. The next 2–3 candles fail to push further — they print small bodies, doji, or partial retracement.

Trigger: A candle that closes back inside the level. Enter on that close. Stop beyond the breakout extreme.

Target: The opposite end of the consolidation that preceded the breakout.

Filter: Volume on the failure candle should be equal to or greater than the breakout volume. Low-volume failures are weaker.

Pro tip: Failed breakouts of multi-day or multi-week levels are the most explosive — they trap many participants.

Setup: A range has formed with clear support. Price briefly dips below support — the "spring" — then snaps back inside the range within 1–3 candles.

Trigger: A strong candle that closes back inside the range with a body that covers most of the spring's depth. Enter on that close. Stop below the spring's low.

Target: The opposite end of the range, then the measured move beyond.

Wyckoff context: The spring is the final shakeout before the markup phase. After the spring, expect rising volume on advances and decreasing volume on declines.

Inverse: "Upthrust" — the same pattern but at resistance, signaling distribution.

Setup: A "pin bar" forms — a candle with a wick at least 2× the body, piercing a key level. The body sits at the opposite end, away from the level.

Trigger: Enter on the break of the pin bar's body in the direction opposite the wick. Stop beyond the wick.

Target: The opposite end of the recent range or 2× the wick length.

Why it works: Pin bars at key levels show that one side tried to push through and failed dramatically — the rejection wick is forensic evidence of order absorption.

Strongest at: Daily/weekly/monthly highs and lows, prior day high/low, gap edges.

Setup: Price approaches a major liquidity zone (prior day high/low, weekly extreme, opening range break). It surges beyond on heavy volume, then within 1–2 candles fully reverses.

Trigger: The reversal candle's close back inside the level. Enter on that close. Stop a few ticks beyond the sweep extreme.

Target: The opposite side of the recent swing range — these reversals are usually large and fast.

Why it works: Modern algorithms specifically target retail-stop clusters. The sweep fills institutional orders at favorable prices, then the algos reverse.

Setup: A wide-range "mother bar" forms. The next candle is an "inside bar" — its high is below the mother's high AND its low is above the mother's low. Range contracts.

Trigger: A close beyond the inside bar's range in the direction of the prevailing trend. Enter on that close. Stop on the opposite side of the inside bar.

Target: Measure the mother bar's range and project it from the inside bar break.

Why it works: Inside bars represent equilibrium between buyers and sellers after a strong move. The break resolves the equilibrium decisively.

Best filter: Trade only inside bars that form at the high/low of the mother bar (i.e., near the trend's edge).

Setup: 5+ bars trade between clear horizontal support and resistance with at least 3 touches of each. The longer the range, the larger the breakout.

Trigger: Close beyond the range boundary with volume at least 1.5× the range's average. Enter on the breakout close. Stop inside the range.

Target: Project the range's height (high minus low) from the breakout point.

Filter: Avoid first 15 minutes (false breakouts common). Best post-10:00 AM after the opening range establishes.

Setup: Bollinger Bands (20, 2) reach their narrowest width in 50+ bars — the "squeeze." Volume and ATR also contract. Energy is building.

Trigger: First candle that closes beyond the upper or lower band on expanding volume. Enter on that close. Stop in the middle of the prior range.

Target: Average true range × 3 from the breakout point.

Bilateral approach: Place stop-buy and stop-sell orders just outside the bands. Whichever fires first wins; cancel the other.

Setup: Pre-market gap of >2% on a recognized news catalyst (earnings, FDA, M&A, guidance). Pre-market volume is unusually high. Premarket holds the gap level.

Trigger: The first 5-min candle after the open holds above (long) or below (short) the prior day's close. Enter on the close of that candle. Stop at VWAP or the prior day's close.

Target: Initial: opening range high (long) / low (short). Trail with 5-min lows/highs.

Critical: Skip if the open immediately fills the gap by 50%+ within the first 5 minutes — that's a "gap-and-fade" environment.

Setup: Mark the high and low of the first 5 minutes (or first 15 minutes for less liquid names). This is the opening range.

Trigger: Close beyond the range boundary on volume. Enter on that close. Stop on the opposite side of the range.

Target: Project the range height from the breakout point. First target = 1× range. Second target = 2× range.

Edge: Best when the ORB direction aligns with: pre-market direction, gap direction, and the daily trend bias.

Avoid: Days with FOMC or major economic data within the first 90 minutes — opening ranges are unreliable.

Setup: Three pushes (legs) in the same direction. Each push prints a slightly higher high (uptrend) or lower low (downtrend), but with progressively shorter range and lower volume.

Trigger: Reversal candle on the third push that closes back inside the prior range. Enter on that close. Stop beyond the third-push extreme.

Target: The base of the first push.

Why it works: Three pushes is Elliott-Wave's exhaustion count. Each weaker push shows depleting demand/supply. The reversal confirms regime change.

Confluence: Best with bearish (or bullish) RSI divergence on the third push.

Setup: A single bar prints volume 3× or greater than the 20-bar average. The bar's range is also 2× ATR. The very next bar shows no follow-through — it prints inside the climax bar's range or reverses.

Trigger: A candle that closes against the climax direction with a body covering at least 50% of the climax bar's range. Enter on that close. Stop beyond the climax extreme.

Target: The base of the leg that produced the climax. These reversals can be large.

Cautions: Climaxes can mark the end of a leg without reversing the trend — sometimes they signal consolidation, not reversal. Use higher-timeframe context.

Setup: 5+ consecutive trending candles. A doji or near-doji forms (body ≤ 10% of range). The doji's location matters — it should be at a key level (round number, prior swing, MA confluence).

Trigger: The next candle closes against the prior trend with a body that covers at least 50% of the doji's range. Enter on that close. Stop beyond the doji extreme.

Target: The most recent significant pullback in the trend (1× retracement).

Why it works: Doji = indecision. After a sustained trend, indecision means the prior conviction has evaporated. Confirmation comes only with the follow-through candle.

Setup: Price moves nearly vertical for 3–5+ bars. Each successive bar's range is larger than the last. Volume increases on each bar. The chart looks "parabolic" — geometric, not linear.

Trigger: First candle that closes against the parabola or fails to make a new high/low while showing volume divergence (volume drops while price tries to extend). Enter on that close. Stop beyond the absolute extreme.

Target: Often a 50% or larger retracement of the parabolic leg — these moves end violently.

Risk warning: Trading parabolic reversals against the trend is the highest-risk play in scalping. Only enter with confirmation; never anticipate.

Setup: Standard or hidden divergence between price and an oscillator (RSI 14 or MACD). Standard bearish divergence: price higher high, RSI lower high. Standard bullish: price lower low, RSI higher low.

Trigger: A candle that closes against the prior trend AFTER the divergence has formed. Do NOT enter on the divergence alone — wait for price confirmation. Stop beyond the divergence extreme.

Target: The most recent meaningful swing in the opposite direction.

Filter: Divergence is most reliable on 5-minute charts at major levels (prior day high/low, weekly extremes). Mid-range divergences are noisy.

Memorize: "Divergence is a warning, not a trigger. Wait for the candle."