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TRADING A CHoch

This document discusses reversal trading strategies known as "ChoCh setups". It outlines the market dynamics and phases involved in bearish and bullish reversals. Specifically, it provides 3-6 step descriptions of the market behavior leading up to reversal opportunities. It also gives examples of different ChoCh setup variations, including stop hunts, fake breaks of structure, and price compression signals. The goal is to educate traders on identifying high probability reversal entry points by understanding liquidity themes and order flow patterns.

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Adrian Dunicari
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2K views8 pages

TRADING A CHoch

This document discusses reversal trading strategies known as "ChoCh setups". It outlines the market dynamics and phases involved in bearish and bullish reversals. Specifically, it provides 3-6 step descriptions of the market behavior leading up to reversal opportunities. It also gives examples of different ChoCh setup variations, including stop hunts, fake breaks of structure, and price compression signals. The goal is to educate traders on identifying high probability reversal entry points by understanding liquidity themes and order flow patterns.

Uploaded by

Adrian Dunicari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TRADING A CHANGE OF CHARACTER

THE DYNAMICS AND STRUCTURE

For a basic idea, ChoCh setups or “Reversal” setups should include the following.
1. Stop Hunting (SH) SH is simply a false breakout above/below the zone where Liquidity
is residing.
2) Break of Structure (BOS) BOS is when market structure is broken (HH or LL for a
continuous trend) or (HL or LH for direction change/ChoCh)

Factors to Consider when Trading ChoCh


The Trend: Trend is your friend, always trade in line with HTF trend direction.
Supply & Demand: Consider market imbalance and mitigation.
Support & Resistance [EQL & EQH]: Always wait for fake-out at the SnR zones.
Compression: This is the best way to know that price is in a retracement. Many traders
get trapped trading in the wrong direction falling into the liquidity inducement trap.
Market Phases for A Bearish Reversal

1) Price gives us a Bullish Impulse forming wave A


2) Wave A is preceded by wave B which is a Bearish Correction forming a liquidity
pool
3) We then get a Bullish Impulse forming wave C which breaks above wave A's high
as an inducement
4) Price reaches a high point where we begin to see the start of the Bearish Trend
forming an Impulse giving us a new wave A
5) We then get a Bearish Correction forming wave B which creates liquidity pool
6) Wave B is preceded by a Bearish Impulse. It is at this point where we look to
identify signs of a ChoCh
7) Once the Pool of liquidity (phase 2, wave B) is swept by phase 6's wave C we
anticipate price to mitigate the liquidity above wave B formed in phase 6
8) Phase 8 gives us our Trade Entry where we look for multiple (+2 or more)
confluences in price for entry confirmations

Example 1
Example 2

Example 3
Market Phases for A Bullish Reversal

1) Price gives us a Bearish Impulse forming wave A


2) Wave a is preceded by wave B which is a Bullish Correction forming a liquidity
pool
3) We then get a Bearish Impulse forming wave C which breaks below wave A's low
as an inducement
4) Price reaches a low point where we begin to see the start of the Bullish Trend
forming an Impulse giving us a new wave A
5) We then get a Bullish Correction forming wave B which creates liquidity pool
6) Wave B is preceded by a Bullish Impulse. It is at this point where we look to
identify signs of a ChoCh
7) Once the Pool of liquidity (phase 2, wave B) is swept by phase 6's wave C we
anticipate price to mitigate the liquidity below wave B formed in phase 6
8) Phase 8 gives us our Trade Entry where we look for multiple (+2 or more)
confluences in price for entry confirmations.

Example 1
Example 2

Example 3
ChoCh Setup Variations

1. Stop Hunt - CHoCh with quick Return to Order Block (Risk Entry)

2. Stop Hunt - ChoCh with late Return to Order Block


3. Stop Hunt + Confirmation Entry (Re-entry) with quick Return to Order Block

4. Stop Hunt + Confirmation Entry (Re-entry) with late Return to Order block
5a. Stop Hunt + Fake BOS

5b. Stop Hunt + Fake BOS

6. Stop Hunt + Compression

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