The PERFECT Sell Entry for US30 (Dow Jones)

The PERFECT Sell Entry for US30 (Dow Jones)

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 Sell 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 Buy Entry & How to Setup your US30 Trade.



There are 3 criteria for a good SELL entry

  1. The price actions are below the RESISTANCE
  2. The 8 EMA has crossed under and is below the 93 EMA
  3. The Heikin-Ashi candles have changed direction and are below 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.

Dow Jones | US30 | Sell Criteria #1 | Support & Resistance



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



Criteria #2:  EMA cross-under

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

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-under the 93 EMA, this signal to me of a potential breakout and change in TREND- the price actions may change from a uptrend to and down trend.

Dow Jones (US30) | EMA cross over



In this criteria, I look for two things:

  1. The 8 EMA crosses under the 93 EMA
  2. The 8 EMA is under the 93 EMA and remains below it.

These criteria signal to me that this is a good SELL 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.



Dow Jones | US30 | Heiken Ashi candles



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

  1. The candles have turn red and change TREND
  2. The candles are below the 8 EMA
  3. The candles are below the RESISTANCE.

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



The SELL entry setup

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



Dow Jones | US30| Sell Entry Setup



I would ENTER the trade as followed:

  • Enter the SELL on the start of the 2nd Red Heikin-Ashi candle
  • Set my Stop Loss (SL)
    • for Opening, 40 pt because of volatility,
    • 20 pt for normal trading hour,
    • above resistance, or
    • above the last GREEN 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 support or
    • When the Heikin Ashi candle confirms 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 SELL 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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