Higher Timeframe Trap – Everyone Long Above This Level is WRONG!
Most of the traps I trade come from the Trading Timeframe or Lower Timeframe charts.
I don't watch the higher timeframe for traps.
However, I do see them from time to time. And they can provide some nice trading opportunity.
Ok, "wrong" is probably a poor choice of word. The reality is that we don't know their strategy and their timeframe.
But let's just say that they're in a drawdown.
And if they're operating on similar timeframes to us, their position is NOT looking good.
They'll likely be under a significant amount of stress. And probably hoping, wishing and praying for some way to get out of the position closer to breakeven.
Let's drop down to the Trading Timeframe chart to see where we currently stand.
But from a wider context perspective, it was also triggering a trap on the higher timeframe chart. Those betting on a gap-open continuation higher suddenly found their trade premise threatened.
And this makes our range breakout SHORT just a whole lot sweeter.
It pays to always be asking, "Is anyone trapped?"
And while our focus should primarily be on the Trading Timeframe chart, we should ensure our scan also extends to the Higher Timeframe chart. At least once per new higher timeframe candle.
Maintain a feel for context. Where is the current price action occurring within the higher timeframe structure? Sometimes this wider situational awareness will keep you out of a bad trade. Other times, as here, it can add additional fuel to our trade idea.
Always be asking, "Is anyone trapped?"
Caught on the Wrong Side of the HTF Trap
The fact that sometimes… the trapper becomes trapped.
Repeating for effect:
- You don't always get it right.
- Sometimes you're "the other trader" that's caught in the trap.
- The key to surviving and minimising damage is in quickly recognising when price movement is NOT behaving as it should if the premise is correct.
- Recognise and adapt.
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