Trading the "U" shaped pattern (Trading the "U" shaped pattern) - MT4/MT5 Resources

This system is very simple and easy to trade, we will see how profitable it is in the long term

On this line we will trade the "U" shaped pattern, which happens very very frequently on EUR/USD, it repeats almost every hour!
(On the M1 timeframe) This pattern is a volatility based pattern, which by default means we will look at volume to check for breakouts, and possibly the ATR indicator as well.

The following are the characteristics of the pattern shown:

Bearish version of this pattern:



Bullish version of this pattern:



Features:

1. This pattern always starts with a breakout in either direction and consists of 1-3 long candles. Short candles are not counted. The longer the candles, the greater the chance of a pullback occurring.
2. The initial breakout is always accompanied by an increase in volatility/volume, so if you are trading with MT4 like me, you may want to check if the volume is increasing, or you can use the period 14 ATR to check.
3. Pullbacks are usually larger or the same as the initial breakout
4. The second phase of the pattern, when the initial breakout ends, is the consolidation or range phase, which is characterized by constant but similar volume levels as bulls and bears fight to control the price. In the consolidation stage, small candles are better, but in the range wash stage, it is also acceptable, but it should not be larger than the range of the breakthrough candle. Therefore, small consolidation candles have a higher chance of a pullback
5. When the candles are flat and follow the S or R line, there is also a greater chance of a pullback during the consolidation phase. If they are round, like a dome pattern, then it is invalid, so they must be arranged horizontally one after another without any tilt. The tilt indicates that the pattern is invalid.
6. The third stage is the callback stage. When the price returns to the equilibrium state, because the initial breakthrough was too large and unsustainable, the price must return to the original equilibrium state. This is what we want to trade, the callback !

How to trade?

1. Recommended pairings: High volume, high volatility currency pairs, preferably with tight spreads. And the market also has to be very volatile, trending markets are not very conducive to this, so obviously the best trading pair is: EUR/USD
2. Recommended timeframe: any timeframe you want, it appears almost equally often on every timeframe, but if your daily average spread is large then try a higher timeframe like M15 or M30, but I would even go with M1 .
3. Recommended trading times : Since we are trading EUR/USD, try to keep yourself in high volatility times, so it should only be traded between London-New York sessions, you can check the Forex Factory calendar for specific times, usually 7am -> 9pm @GMT +0 in summer and 8am -> 10pm @GMT +0 in winter.
4. Types of Trading Markets : Work better in volatile markets when avoiding market trends

=======================================================================================

Entry requirements: Breakout in either direction lasting 1-3 candles, accompanied by increasing volume

Entry point:

1. After the initial breakout is over, wait a moment to see if a consolidation starts to form
2. : Small candle consolidation is better than the wash stage
3. When you see a consolidation forming in the opposite direction to the initial breakout, so for a "U" pattern, bullish (buy) and for an inverted "U" pattern, bearish (sell)

Stop Loss : A few pips above/below the consolidation high, so if you wait 2-3 candles after the initial breakout and see those 2-3 candles in consolidation, then just check the high or low of the candle and set your stop loss a few pips above/below it (you should have a positive RR, so adjust your stop loss based on that value)

The take profit is a few pips below the low of the initial breakout candle because we know the price will only fall back to the initial level, so we have to cut our profit early in case the price stops a few pips ago.

You can customize the take profit/stop loss levels, but it is important to note that you should have a positive RR, which means that the profit from the take profit is greater than the loss from the stop loss.

Here is an example of my trade from yesterday, how I traded this pattern:



I hope you can understand the pattern now and good luck with your trading!

Last but not least:

1. No trolls , any troll will be banned immediately !
2. (Try) to stay on topic!
   
3. No fighting , and no insults allowed , try to make this topic an intellectual debate!
   
4. Trade the system and show pictures of your trades, your observations of the system and patterns, and help improve the system!