Entry area and triggerSteps 3 and 4: where to get in, and when.
Once the trend and the momentum check out, you need a place to get in and a signal that says now. The entry area is a key level with an alert on it. The trigger is a 1-hour momentum candle that rejects that level.
Step 3: the entry area
Draw your key support and resistance levels, the prices where the market turned before. You can draw them on the 1-hour, 4-hour and daily charts. A line chart often makes them easier to see, because it connects the closing prices and leaves out the noise of the wicks.
The best levels line up with a round number, such as 1.0800 on EUR/USD, and if you like, with a Fibonacci retracement, a tool that marks common pullback depths. You can apply the Fibonacci on the 1-hour and 4-hour charts. A key level that lines up with both becomes your target entry area.
An alert instead of an order
Once you have the level, you do not place a limit order there. You set an alert and wait for confirmation.
A level on its own proves nothing, and price can run straight through it, so an order there would fill you whether or not the level holds. The alert tells you that price has arrived. The trigger in step 4 tells you whether buyers or sellers are actually defending the level.
Step 4: the trigger candle
The trigger is a momentum candle on the 1-hour chart: a bullish one in an uptrend, a bearish one in a downtrend. Its body has to be at least half the current ATR, so divide the ATR by 2 to get your threshold. You measure only the body, from the open to the close, never the wicks.
In the system’s own example, the ATR is 36.8 pips, so half of it is 18.4 pips. A bullish candle with a body bigger than 18.4 pips is a valid trigger, and anything smaller is not strong enough. In a far more volatile market with an ATR of 192 pips, the threshold would be 96 pips.
Candles like this tend to appear when big buyers or sellers step in, often on strong news or major headlines, so they show real conviction. It is the same idea as the momentum candle entry in the lesson on 4 professional entry techniques.
The rules that make a trigger valid
Size alone is not enough. The candle has to reject your key level: it touches the level and pushes away from it. A trigger cannot just appear anywhere on the chart, and a candle that forms too far from the level does not count. The system enters on a reversal at a level, and breakouts are not part of it.
The candle has to form on the 1-hour chart, not the 4-hour or the 30-minute, and during the London or New York session. Triggers in the Asian session do not count.
The wicks matter in one way: your stop-loss has to cover the trigger candle’s wick, or the trade idea is invalid. And if the body is bigger than a full ATR, you skip it. Those oversized candles, often with large wicks, tend to give weaker entries. If there is no valid trigger, there is no trade.
In short
- Step 3: mark key support and resistance, ideally on a round number and a Fibonacci level, and set an alert there instead of an order.
- Step 4: the trigger is a 1-hour momentum candle in the trend direction whose body, wicks excluded, is at least half the ATR and no bigger than 1 ATR.
- It must reject your level during the London or New York session, and your stop must cover its wick, or there is no trade.
Key terms
- Support and resistance
- Price areas where buying (support) or selling (resistance) stepped in before. Old resistance often turns into new support after a break.
- Round number
- Prices like 1.1000 or 150.00 where many orders cluster. They often act as support or resistance.
- Fibonacci retracement
- Levels at fixed percentages of a move (38.2%, 50%, 61.8%) that traders use to look for pullback entries.
- Momentum candle
- A large candle with a big body that shows strong buying or selling. Used as a trigger in the momentum system.
- ATR (average true range)
- The average size of a price bar over a period, usually 14 bars. A simple way to measure how much a market normally moves.
- Trading sessions
- The Asian, London and New York trading hours. Most volume, and most clean moves, come in London and New York.