I find the best trading setups are where traps catch out one side of the market forcing covering of positions.

One setup that I find very useful is best shown on a one minute chart with volume setting up conditions.

I am looking for a low on an expansion bar and with high volume. I have marked it - Exhaustion 1.

The second exhaustion has slightly less volume and forms after a retracement.

This exhaustion bar is usually at new lows but can be at a slightly higher low.

The theory is that these exhaustion bars get rid of the majority of sellers leaving the potential for a reversal to the upside.

The entry is based on a failed move to the downside which traps sellers forcing them to cover.

I expect a fast move to the upside, so if price doesn't move quickly I will close out.

There is a few potential entry areas that I have marked.

The reverse is applicable for downside trades. (The entry area for the short should read Lower High)

Dax setup.jpg (180.34 kb)