A trader breaks down a bearish swing trade setup using daily fair-value gaps and inversion patterns. He drills from the hourly chart down to the 1-minute to find an entry point, then enters short with a stop above the recent high and targets the prior lows for profit.
I'm looking to trade this move here. This hourly high is our daily fair value gap tap. This is where we tapped into that daily gap and also that inversion. That inversion made my bias bearish. That daily gap is my confirmation for a retracement. And now it is my job as a trader to look at the lower timeframe and try to catch a move based off of an hourly, 15-minute, 5 or 1 minute. In this case, I'm going to show you a swing trade that I did with this position here. We tapped into our daily fair value gap and on the 1-hour, what do you guys notice? While we were on the retracement to the daily fair value gap, we left behind a bullish gap here. Remember how I said I want the gap to be inverse within 2 candles or 3 candles with speed? What do you see here? This is a good amount of speed. We have an inversion. We have a change in the state of delivery, which is in my eyes, it's just a confirmation on a reversal occurring. And now you could take your swing trade here. If you're a swing trader, this is exactly how you would have your swing. You would have a short position. You can enter off the inversion, stop above the current high, and you can target your lows that we had earlier, which are all the way down here. This is going to be your relative equal lows.
