Use three charts to trade a pullback within a trend. Each chart has one job.
We also use the 21 EMA and 200 EMA as guides when analysing the charts and managing trades. The 21 EMA helps show the shorter-term trend and pullback context; the 200 EMA provides a broader trend reference and may act as dynamic support or resistance. Neither EMA is a signal on its own.
1. 60-minute chart: direction and key levels
- Long bias: higher highs and higher lows.
- Short bias: lower highs and lower lows.
- Check price’s position and behaviour around the 21 EMA and 200 EMA for trend context.
- Mark previous-day highs/lows, overnight extremes, and relevant support/resistance.
- Avoid entries directly into an opposing level. If direction is unclear, wait.
2. 4,000-tick chart: the pullback setup
For a long, wait for upward structure, then a pullback toward premarked support that holds above the structural low. Note whether price is reacting around the 21 EMA or 200 EMA, but require the price structure to support the setup.
For a short, wait for downward structure, then a rally toward premarked resistance that stays below the structural high. The EMAs can help show whether the pullback is happening within the broader setup.
An EMA touch alone is not an entry signal.
3. 1,000-tick chart: entry confirmation
Long: wait for a break of a small reaction high, followed by a pullback holding a higher low. A confirmation bar closes above the preceding bar’s high. Place the entry one price tick above its high.
Short: wait for a break of a small reaction low, followed by a rally holding a lower high. A confirmation bar closes below the preceding bar’s low. Place the entry one price tick below its low.
Use the 21 EMA and 200 EMA as additional context for the entry. If price structure conflicts with the setup, or an EMA sits close to the entry and limits the available room, wait for a clearer opportunity.
Cancel the entry if the defining higher low or lower high breaks before the order fills. Do not chase a missed trigger.
4. Stop, size, and target
- Stop: one price tick beyond the defining higher low for longs or lower high for shorts. Test whether this buffer is adequate.
- Quantity: calculate risk from the actual entry-to-stop distance. NQ = $20 per point; MNQ = $2 per point, per contract.
- Target: next premarked opposing level. As an initial rule to test, skip trades offering less than 2:1 gross reward-to-risk.
- Include costs and slippage. Never widen the stop to avoid a loss.
When to skip
Skip conflicting chart structure, sideways chop, insufficient target room, and scheduled news windows excluded by your trading plan or provider. Don’t enter based on an EMA touch or crossover alone.
60-minute context → 4,000-tick setup → 1,000-tick confirmation.
An illustrative strategy to test in simulation, not a proven profitable system. Tick charts count transactions, not fixed volume. Stops do not guarantee an exact fill.