In the previous article, we looked at the Buy setup. In this write up, we shall look at the 3-Wave Sell setup
Like earlier mentioned, The 3-Wave Trading strategy Consists of basically 3 waves. It doesn’t matter what markets you are trading. Stocks. Forex, cryptos. Indices, options, etc, the 3W setups forms on all charts on any timeframe.
SELL SETUP ILLUSTRATION
In sell setup, Waves 1 and 2 form the resistance trendline. Just like the above but reversed. There must be clear space between the waves.
So as soon as you get Wave 1 and Wave 2, you connect the 2 points and you will have your trendline. After this you will just wait patiently for price to make Wave 3.
Wave 3 in the resistance trendline zone gives the sell entry. Like we mentioned above, we shall discuss the PROPER entry requirements on each of these setups in our later sections.
Just like above, connecting the lows x & y gives you the support trendline which we shall use as our exit/target zone. Stop loss is set a few pips above the highest high on Wave 3.
Now that we have seen the illustration of the sell setup, we can now briefly look at a few examples of this scenario on the charts
3-wave Sell Setup Examples
BITCOIN (BTC/USD) (Bitcoin/Us Dollar)
Looking the Bitcoin Crypto Chart above, we can see waves 1,2 and 3 labelled just like in our illustration above, Wave 1 and 2 give the basis for our sell entry trendline.
A bearish candle on Wave 3 confirms the 3-wave sell setup entry Signal. Stop loss is set a few pips above the highest high on Wave 3. Stop loss is set a few pips above the highest high on Wave 3.
Support Trendline X and Y give the basis for our Profit Target zone as shown in the chart above.
AUS200 Index
Yes, picture perfect setup on the AUS200, 4-Hour timeframe. But don’t worry, you don’t have to get a picture perfect setup. All you need is one that qualifies to the basic rules as on the illustration.
So, from the above chart, I hope you can clearly see waves 1,2 and 3 labelled. Wave 1 and 2 give the basis for our sell entry trendline.
A bearish candle on Wave 3 confirms the sell entry Signal. Stop loss is set a few pips above the highest high on Wave 3.
Target zone as shown in the chart above