Lesson
The ideal reversal and continuation setups
A structured three-step process for capturing ideal reversal and continuation expansions each week.
Most of the expansion moves worth trading fall into two shapes: a reversal, where price sweeps a level and turns, and a continuation, where price pulls back and resumes the move it was already making. They look different on the chart, but the process for capturing them is the same three steps. Learn the process once and it reads both.
Two shapes, reversal and continuation, read by one process.
02 / Framework on the daily
Direction from the daily first.
The first step is the framework. On the daily I identify reactions at relevant swings to understand the direction the current day is likely to favour. That top-down read decides whether I am hunting a reversal against the recent move or a continuation with it. Without the framework, both setups become guesses, because the same candle sequence means different things depending on the higher-timeframe context.
03 / Confirmation on the 4H
The profile has to agree.
The second step is confirmation. I align the higher timeframes with a daily profile so the idea has more than one thing supporting it. A reversal setup wants a swept level and a shift in delivery. A continuation setup wants an intact trend and a clean pullback into structure. The confirmation step is where I make sure the day's shape actually matches the setup I am looking for before I commit.
04 / Entry on the expansion
Enter on the opposing candle signature.
The third step is the entry. I enter on opposing candle signatures inside the continuation to get onside with the expansion, a defined risk point on the pullback rather than a chase into strength. Whether the day is a reversal or a continuation, the entry mechanics are the same: wait for the confirming closure, take the retracement into structure, and let the expansion move pay. Three steps, top down, the same every week.