Is it a Setup?

M5 has to set it up. That means that before anything, we need at least an M1 bounce.
This first bounce gives an M5 candle that becomes the M1 setup.

That setup has to become an M1 or an M2 DEM.
This is a study chart for the M1 DEM. It has to be an M5 RT for it to be high probability.

If M5 Doesn’t have a lower high, the initial partials target is the M5 EMA9.
The distance to the M5 EMA9 tells us if the trade is worth taking.

Trades are worth taking if price is at a pre planned level and coming from a straight line flush. Otherwise, we wait for rejection and a continuation attempt to set up the M5 DEM.

Here is a study of the interplay between M5 and M1. M5 gives the levels.

The key to any reversal is the box is the bounce. Then M5 will always set it up. If it doesn’t, you let it go. You don’t chase, you don’t front run.

After the M5 EMA9 rejection we can draw the M5 imbalance (box) for the M5 DEM.

If you study the M1 DEM chart, there was failed continuation. If you study the current M5 setup, price is consolidating inside the box. We need the lower high to set up the DEM. There is no immediate trade here.

The DEM will set up somewhere, either below resistance (DEM), or towards the EMA21/50 (CMod).

Because if that lower high forms, sellers will attempt continuation. If you front run the setup, you risk losing big.

When price accelerates below the box, the lower boundary becomes resistance and the process starts from scratch.

Like this.

If the distance towards resistance is about $40, it means $1 for $QQQ

Here with $QQQ levels

CONTINUATION

When the DEM completes, we are out or mostly out. Continuation has to set up.
– This is where we look for a big box, small box on M1/M2.
– Keep an eye on M5 to see if we have a higher low. If not, risk of exhaustion into the break out. (Wait for backtest).

If M5 doesn’t make a decisive higher low, we trail runners.

When in doubt, zoom out to M10.

And consider if H1 is setting up a bounce or a reversal. This would have to look the same as what we do on M5. In this example, there is no H1 reversal. This is just a bounce.

Keep in mind that break outs fail way more often than reversals. Be confident if reversal parameters are met. Be very sceptical if a break out doesn’t set up exactly as we want.

Here is H1 with M5. If we want that candle close to give us confidence on M5, then the same applies to H1.

This is the system.

Parameters not met? Don’t FOMO on that look above. It costs too much money.