The PERFECT Buy Entry for the US30

The PERFECT Buy Entry for the US30

Introduction

The US30 is like any other index. It can only move in three ways- Up, Down, or Sideway. In this article, I will be discussing how to capture the PERFECT Buy entry using the three tools I have discussed in the previous articles: Heiken Ashi candles, support/resistance and EMA cross-over. To properly capture this move, you should have patience for ALL the confluences to align before entering your trade.

Here is the link for The PERFECT Sell Entry & How to Setup your US30 Trade.



There are 3 criteria for a good BUY entry

  1. The price actions are above the SUPPORT
  2. The 8 EMA has crossed over and is above the 93 EMA
  3. The Heikin-Ashi candles have changed direction and are above the 8 EMA


Criteria #1:  Support & Resistance

The best way to look at Support and Resistance is through historical data and higher time frame.  I trade on the 1 minute timeframe so I look at the 5, 15, and 30 minute time frame to see where all the major supports and resistance are.  If the S/R line up then it indicate a position of strong support or resistance where price actions are likely to bounce.

On the 1 minute time frame, where I trade, I look at the the price actions and how they are behaving.

Support resistance on US30 (Dow Jones)



I could see here that the price actions have ben moving sideway in a consolidation zone above the support and could not break down below the support. This is a good BUY signal if other criteria are met.



Criteria #2:  EMA cross-over

The next criteria I use to look for confluence for a good BUY entry is the EMA cross-over.

I use the 8 EMA and the 93 EMA.  The 8 EMA is my FAST moving average and the 93 EMA is my SLOW moving average.  When the 8 EMA cross-over the 93 EMA, this signal to me of a potential breakout and change in TREND- the price actions may change from a down trend to and uptrend.

EMA cross over on US30 (Dow Jones)



In this criteria, I look for two things:

  1. The 8 EMA crosses over the 93 EMA
  2. The 8 EMA is above the 93 EMA and remains above it.

These criteria signal to me that this is a good BUY entry if other criteria are met.



Criteria #3:  Heiken-Ashi candles

I love trading with the Heikin-Ashi candles because I can clearly see when the price action is trending UP, DOWN, or Sideway.  If you have not master this skill, I highly recommend you to study and master this before taking a trade.  There are plenty of YouTube videos teaching this concept.



Heikin-Ashi candles US30 (Dow Jones)



In my setup, I look for the following criteria with the Heikin-Ashi candles: 

  1. The candles have turn green and change TREND
  2. The candles are above the 8 EMA
  3. The candles are above the SUPPORT.

These criteria signal to me that this is a good BUY entry if other criteria are met.



The BUY entry setup

Once I have confirm that my all three of my criteria for a PEFRECT Buy entry are met on the 1 minute time frame. 



US30 (Dow Jones) BUY entry setup



I would ENTER the trade as followed:

  • Enter the BUY on the start of the 2nd Green Heikin-Ashi candle
  • Set my Stop Loss (SL)
    • for Opening, 40 pt because of volatility,
    • 20 pt for normal trading hour,
    • below support, or
    • below the last RED Heikin-Ashi candle
  • My Take Profit (TP)
    • I want my TP to be higher than my SL risk so I look for an asymmetric gain where the risk to reward ratio RRR is greater than 2
    • Typically I would exit at the MAJOR resistance or
    • When the Heikin Ashi candle confirm a TREND change

To learn how to setup these indicators go to: "How I setup my US30 Opening Trade"

 



Closing

I hope that this article has helped you understand how to spot a good BUY entry. It’s pretty easy to find and happens many times during a trading session.

I do NOT recommend to you to use this as a trading strategy with real money.  Setup a FREE FTMO demo account to practice and try it out.  It has taken me three years to develop this strategy and I am still learning everyday.

To win in trading requires more than a good trading plan, trading psychology is a much BIGGER factor.  So do back testing and and paper trade to develop consistency and understand market behavior.  Do NOT assume you will win.  Always assume the WORST and minimize your RISK.

***  NOTE- this is mainly for reference on how I setup my trade on a FREE account and I do NOT recommend executing this strategy with real money. 

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2 comments

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Dionysios Mamalos

I like it can you suggest me how to trade on Indian market
Best indicator used in market

Ajay

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