Download Squirrel Trader Notes: Over Extended Bullish – Pattern 101 Bullish

Squirrel Trader Notes:
Over Extended Bullish – Pattern 101
Bullish reversal pattern which indicates a possible bullish
reversal.
R2 to S2 as a normal change in price.
Capitalize on the Bullish reversal when the price finally finds
support.
Object is to go long when this is found.
Over Extended Bearish – Pattern 102
Indicating a possible Bearish Reversal.
This presents an opportunity to go short.
Object is to capitalize when the price finds its Resistance
point at R1 and take the retracement.
The more the price is extended the greater the recoil will
be.
S2 to R2 is much less in magnitude and time that S1 to R1.
Bull Pull Back – Pattern 103
Bull Pattern showing Higher pivot highs and higher pivot
lows.
Trend: S1 > S1, R2 > R3: R1 > R2
Momentum: (R1 – R2) > (R2 – R3)
The distance expands as the pattern develops.
An Example play using this pattern is to Buy Long.
Bearish Pullback – Pattern 104
This is defined by a increasing momentum in the Bearish
Direction.
Lower pivot Highs and Lower Pivot lows in an increasing
magnitude.
The Distance Expands and the Pattern Develops.
An Example play using this pattern is to Sell or Short the
Stock.
Bullish Breakout – Pattern 105
Higher Pivot highs and Higher Pivot lows. This is an
increasing Bullish Momentum.
The Objective of this Pattern is to Capitalize on the
increasing Bullish Momentum when the Price Breaks the
Prior Resistance level – R1 to the Next level of Resistance.
An Example Play of this Pattern is to Buy Long to the next
Resistance Level.
Bearish Breakdown – Pattern 106
Lower Pivot highs and Lower Pivot lows. This is an
increasing Bearish Momentum.
The Objective of this Pattern is to Capitalize on the
increasing Bearish Momentum when the Price Breaks the
Prior Support level – S1 to the Next level of Support.
An Example Play of this Pattern is to Sell Short to the next
Support Level.
Bullish Divergence – Pattern 107
This is a bullish divergence pattern which is defined by lower
pivot highs and lower pivot lows.
This Pattern illustrates slowing bearish momentum because
the distance between the pivot lows decreases as the pattern
develops.
The Objective of this pattern is to capitalize on the Bullish
reversal indicated by slowing momentum at S1.
Example play using this pattern is to Buy Long.
Bearish Divergence – Pattern 108
This is a bearish divergence pattern which is defined by Higher
pivot highs and Higher pivot lows.
This Pattern illustrates slowing bullish momentum because
the distance between the pivot Highs decreases as the
pattern develops.
The Objective of this pattern is to capitalize on the Bearish
reversal indicated by slowing momentum at R1.
Example play using this pattern is to Sell Short.
Bullish Divergence – Pattern 109
This is a bullish Reversal pattern which is defined by lower
pivot highs and lower pivot lows.
This Pattern illustrates slowing bearish momentum because
the distance between the pivot lows decreases as the pattern
develops.
The objective of this pattern is to capitalize on the Bullish
breakout above R1 – Which is the Defining Event of the Bullish
Reversal of the Trend.
An Example Play using this pattern is to Buy Long.
Bearish Divergence Breakdown – Pattern 110
This is a bearish Reversal pattern which is defined by Higher
pivot highs and Higher pivot lows.
This Pattern illustrates slowing bullish momentum because
the distance between the pivot highs decreases as the
pattern develops.
The objective of this pattern is to capitalize on the Bearish
breakdown below S1 – Which is the Defining Event of the
Bearish Reversal of the Trend.
An Example Play using this pattern is to Sell short.
Divergent Breakdown Retracement – Pattern 111
Opposite of 112.
This is a Bearish pattern and the first retracement of a newly forming bearish trend.
It is important to note that S1 has broken the previous bullish trend high of S2 signifying a change in the previous trend.
This Pattern illustrates a previously slowing bullish momentum because the distance between the Pivot highs decreases
as the pattern develops.
The Objective of this Patter is to capitalize on the first bearish pullback in the newly forming trend.
An Example play using this pattern is to Sell Short.
Divergent Breakout Retracement – Pattern 112
This is a Bullish pattern and the first retracement of a
newly forming bullish trend.
It is important to note that R1 has broken the previous
bearish trend high of R2 signifying a change in the
previous trend.
This Pattern illustrates a previously slowing bearish
momentum because the distance between the Pivot
lows decreases as the pattern develops.
The Objective of this Patter is to capitalize on the first
bullish pullback in the newly forming trend.
An Example play using this pattern is to Buy Long.
Head & Shoulders Top – Pattern 113
This is a bearish reversal pattern which is defined by the
previous 3 resistance levels forming a head and shoulders
formation notated in yellow.
This Pattern illustrates slowing bullish momentum because
the distance between the pivot Highs decreases as the
pattern develops.
Notice that an official break in support has not occurred at
this point and support is still trending upward.
The Objective of this pattern is to capitalize on the
previous slowing bullish momentum and take a bearish
position on the potentially failing bullish trend.
An example play using this pattern is to Sell Short.
Head and Shoulders Bottom – Pattern 114
This is a bullish reversal pattern which is defined by the
previous 3 support levels forming a head and shoulders
formation notated in yellow.
This Pattern illustrates slowing bearish momentum because
the distance between the pivot lows decreases as the
pattern develops.
Notice that an official break in resistance has not occurred
at this point and resistance is still trending downward.
The Objective of this pattern is to capitalize on the previous
slowing bearish momentum and take a bullish position on
the potentially failing bearish trend.
An example play using this pattern is to Buy Long.
Head and Shoulders Breakdown – Pattern 115
This a bearish reversal pattern which is defined by the
previous 3 resistance levels forming a head and shoulders
formation notated in yellow.
This Pattern illustrates slowing bullish momentum because
the distance between the pivot Highs decreases as the
pattern develops.
This pattern is used to take advantage in the break of the in
the previous trends last support level, or S1. A break at this
point will constitute a bear shift in the trend.
The Objective of this pattern is to capitalize on the previously
slowing bullish momentum and take a bearish position on the
first breakdown of the previous trends support located at S1
An example play using this pattern is to Sell Short.
Head & Shoulders Breakout – Pattern 116
This is a bullish reversal pattern which is defined
by the previous 3 support levels forming a head
and shoulders formation notated in yellow.
This Pattern illustrates slowing bullish momentum
because the distance between the pivot Lows
decreases as the pattern develops.
This pattern is set to take advantage of the break
in the in the previous trends last resistance level,
or R1. A break at this point will constitute a bullish
shift in the trend.
The Objective of this pattern is to capitalize on
the previously slowing bearish momentum and
take a bullish position on the first breakout of the
previous trends resistance located at R1
An example play using this pattern is to Buy Long.
Head and Shoulders Top Retracement – Pattern 117
This is a bearish continuation pattern which is
created by newly formed bearish trend and
follows a previously defined head and shoulders
reversal pattern as notated in yellow.
This pattern illustrates the first retracement after
the official breakdown of prior support at S2.
Because a new bearish trend is forming,
momentum is difficult to define. However, note
that an increase in bearish momentum with give a
higher probability to future bearish setups and a
strengthening bearish trend.
The objective of this pattern is to capitalize on the
previously slowing bullish momentum and the
breakdown of the bullish trend. The newly
formed bearish trend has been confirmed by the
break in previous support at S2 and gives a
bearish position on the first retracement a higher
probability.
An example play using this pattern is to Sell Short.
Head and Shoulders Bottom Retracement
This is a bullish continuation pattern which is
created by newly formed bullish trend and follows a
previously defined head and shoulders reversal
pattern as notated in yellow.
This pattern illustrates the first retracement after
the official breakout of prior resistance at R2.
Because a new bull trend is forming, momentum is
difficult to define. However, note that an increase in
bullish momentum will give a higher probability to
future bullish setups and a strengthening bullish
trend.
The objective of this pattern is to capitalize on the
previously slowing bearish momentum and the
breakout of the bear trend. The newly formed
bullish trend has been confirmed by the break in
previous resistance at R2 and gives a bullish position
on the first retracement a higher probability.
An example play using this pattern is to Buy Long.
News Event Bullish Breakout – Pattern 1
This setup is preceded by neutral trading conditions
followed by a news announcement that causes a
bullish breakout above resistance.
In the currency market, many news events are
accompanied by an increase in volatility. This volatility
often leads to break of either support or resistance.
Special attention must be given to which currency
within the currency pair will be affected by the news
announcement and whether that affect with have a
bullish or bearish result.
The objective of this setup is to capitalize on the bullish
breakout of resistance during or shortly after the news
announcement.
An example play using this setup would be to buy long the EUR/USD on a positive news announcement for the Euro or a
negative news announcement for the USD.
News Event Bearish Breakdown – Pattern 2
This setup is preceded by neutral trading
conditions followed by a news announcement that
causes a bearish breakdown below support.
In the currency market, many news events are
accompanied by an increase in volatility. This
volatility often leads to break of either support or
resistance.
Special attention must be given to which currency
within the currency pair will be affected by the
news announcement and whether that affect with
have a bullish or bearish result.
The objective of this setup is to capitalize on the
bearish breakdown of support during or shortly
after the news announcement.
An example play using this setup would be to sell short the EUR/USD on a negative news announcement for the Euro or
a positive news announcement for the USD.
Post News Bullish Pullback – Pattern 3
This setup is preceded by a bullish breakout above
resistance produced by a news announcement. The
breakout is then followed by a pullback to support. This
support is determined by the next upward movement in
price.
In the currency market, many news events are
accompanied by an increase in volatility. This volatility
often leads to break of either support or resistance.
If a breakout opportunity is missed. It will often be
followed by a pullback setup.
The objective of this setup is to capitalize on the bullish
pullback to support after a news announcement.
An example play using this setup would be to buy long the EUR/USD on a positive news announcement for the Euro or a
negative news announcement for the USD.
Post News Bearish Pullback – Pattern 4
This setup is preceded by a bearish breakdown below
support produced by a news announcement. The
breakdown is then followed by a pullback to Resistance.
This resistance is determined by the next downward
movement in price.
In the currency market, many news events are
accompanied by an increase in volatility. This volatility
often leads to break of either support or resistance.
If a breakout opportunity is missed. It will often be
followed by a pullback setup.
The objective of this setup is to capitalize on the bearish
pullback to resistance after a news announcement.
An example play using this setup would be to sell short
the EUR/USD after a negative news announcement for
the Euro or after a positive news announcement for the
USD.
Bank Close Bullish Drift – Pattern 5 – EUR/USD Pair
This setup is time sensitive and occurs
approximately 2 hours prior to the New York
session close.
This trade is based on the currency’s reaction to
the close of the London and German Markets
which occurs approximately 2 hours before the US
market close.
As the London and the German markets close,
they withdraw their supporting bids and offers.
This decrease in trading activity causes the bearish
trend of the day to lose its momentum resulting in
a bullish drift.
The Objective of this setup is to find a bearish trend that is down 1 ATR below its average trading levels on the daily
chart. Approximately 2 hours before the US close the bearish trend will lose momentum due to the close of both the
London and German markets. This trade seeks to capitalize on the approximate 20 Pip bullish drift that follows the close
of those foreign markets.
An example play using this setup would be to buy long the EUR/USD approximately 2 hours before the US market close
on a bearish day that is trading 1 ATR below its normal range.
Bank Close Bearish Drift – Pattern 6 – EUR/USD Pair
This setup is time sensitive and occurs
approximately 2 hours prior to the New York
session close.
This trade is based on the currency’s reaction to
the close of the London and German Markets
which occurs approximately 2 hours before the US
market close.
As the London and the German markets close, they
withdraw their supporting bids and offers. This
decrease in trading activity causes the bullish trend
of the day to lose its momentum resulting in a
bearish drift.
The Objective of this setup is to find a bullish trend that is up 1 ATR above its average trading levels on the daily chart.
Approximately 2 hours before the US close the bullish trend will lose momentum due to the close of both the London
and German markets. This trade seeks to capitalize on the approximate 20 Pip bearish drift that follows the close of
those foreign markets.
An example play using this setup would be to sell short the EUR/USD approximately 2 hours before the US market close
on a bullish day, that is trading 1 ATR below its normal range.
Slow Time Bullish Dollar (Overdone RSI) – Pattern 7 – EUR/USD, GBP/USD & USD/CHF
This Setup Takes place during slow market periods, and
utilizes the RSI Indicator across 3 currency pairs.
A bullish reversal of the dollar is likely to occur when
the following conditions are met.
RSI above 70 for the EUR/USD (Fiber)
RSI above 70 for the GBP/USD (Cable)
RSI below 30 for the USD/CHF (Swissie)
The objective of this setup is to take advantage of
bullish reversal of dollar due to an overdone RSI
indicator on the EUR/USD, GBP/USD & USD/CHF.
An example play using this setup would be to sell short
the EUR/USD during a slow period in the market when
the RSI is overdone on the EUR/USD, GBP/USD &
USD/CHF.
Slow Time Bearish Dollar (Overdone RSI) – Pattern 8 – EUR/USD, GBP/USD & USD/CHF
Setup Takes place during slow market periods, and
utilizes the RSI Indicator across 3 currency pairs.
A bearish reversal of the dollar is likely to occur
when the following conditions are met.
RSI below 30 for the EUR/USD (Fiber)
RSI below 30 for the GBP/USD (Cable)
RSI above 70 for the USD/CHF (Swissie)
The objective of this setup is to take advantage of
bearish reversal of the dollar due to an overdone
RSI indicator on the EUR/USD, GBP/USD &
USD/CHF.
An example play using this setup would be to buy
long the EUR/USD during a slow period in the
market when the RSI is overdone on the EUR/USD,
GBP/USD & USD/CHF.
Bullish Move on Rising Stochastic RSI – Pattern 9
This setup utilizes the Stochastic RSI
indicator and occurs when the Stochastic
RSI indicator is rising from below the 20 %
line.
The Objective of this setup is to take
advantage of a likely bullish move as
indicated by the Stochastic RSI rising from
its overdone state.
An Example play using this setup is to Buy
Long the EUR/USD when the Stochastic RSI
is rising from below the 20% line.
Bearish Move on Declining Stochastic RSI – Pattern 10
This setup utilizes the Stochastic RSI indicator and
occurs when the Stochastic RSI is falling from
above the 80 % line.
The Objective of this setup is to take advantage of
a likely bearish move as indicated by the
Stochastic RSI falling from its overdone state.
An Example play using this setup is to Sell Short
the EUR/USD when the Stochastic RSI is falling
from above the 80% line.
Bullish Overextended Bollinger – Pattern 11
This setup utilizes the Bollinger band indicator and occurs when the
currency has a closing bar between lower 2nd and 3rd standard deviation
bands.
The objective of this setup is to take advantage of a likely bullish reversal
due to overextended positions indicated by a closing bar between lower
2nd and 3rd standard deviation bands.
An Example play using this setup is to Buy Long the EUR/USD when the
currency has a closing bar between lower 2nd and 3rd standard deviation
bands.
Bearish Overextended Bollinger – Pattern 12
This setup utilizes the Bollinger band indicator and occurs when the
currency has a closing bar between upper 2nd and 3rd standard deviation
bands.
The objective of this setup is to take advantage of a likely bearish reversal
due to overextended positions indicated by a closing bar between the
upper 2nd and 3rd standard deviation bands.
An Example play using this setup is to Sell Short the EUR/USD when the
currency has a closing bar between the upper 2nd and 3rd standard
deviation bands.