Momentum and Psychology Trading
I was looking at triggers for a trading strategy and asked AI to give me some ideas.. here’s what it said
Here are several potential trading trigger ideas that could capitalize on momentum and market psychology:
- Failed Double Top/Bottom Pattern
- When a second peak/trough fails to reach the previous one
- Indicates momentum loss in original direction
- Often leads to sharp reversals as traders exit positions
- Could trigger on failure to reach previous level
- Support/Resistance Level Sweep
- When price quickly moves through a major level but fails to hold
- Triggers stops beyond the level
- Often leads to sharp reversals
- Similar to your current strategy but using historical levels
- Round Number Rejection
- Major psychological levels (e.g., 40000, 40500)
- When price approaches but fails to break
- High volume of limit orders often sit at these levels
- Could trigger on failed breakout of round numbers
- Moving Average Bounce Failure
- Popular MAs like 50, 100, 200
- When price breaks MA but fails to hold
- Many traders use MAs for entries/exits
- Could trigger on failed MA break and return
- Fibonacci Level Rejection
- Popular retracement levels (61.8%, 78.6%)
- When price reaches but fails to break
- Many traders place orders at these levels
- Could trigger on rejection from Fib level
- Gap Fill and Reverse
- When market gaps up/down at open
- Fills gap but fails to continue
- Traders often expect gap fills
- Could trigger after gap fill completion
- Trend Channel Break Failure
- When price breaks trend channel
- Fails to hold break and returns to channel
- Often leads to strong move in original direction
- Could trigger on return to channel
- Volume Profile Point of Control (POC) Rejection
- High volume nodes in market
- When price breaks POC but fails to hold
- Areas of high liquidity and order clusters
- Could trigger on failed break of POC
- Previous Day High/Low Break Failure
- Important daily levels
- When price breaks but fails to hold
- Many daily traders watch these levels
- Could trigger on return inside previous day’s range
- Failed Breakout After Consolidation
- When price breaks from tight range
- Fails to hold break and returns
- Often leads to strong move opposite to break
- Could trigger on return to consolidation range
- Multi-Timeframe Support/Resistance Failure
- Levels that align on multiple timeframes
- When breaks fail across timeframes
- Creates cascade of position closures
- Could trigger on multi-timeframe rejection
- Order Block Rejection
- Areas of significant previous buying/selling
- When price returns but fails to break through
- Often leads to continuation of main trend
- Could trigger on rejection from order block
- Failed Break of Opening Range
- First hour trading range
- When price breaks but fails to hold
- Important for day traders
- Could trigger on return to opening range
- Inside Bar Breakout Failure
- When price breaks from inside bar
- Fails to continue in breakout direction
- Often leads to sharp reversal
- Could trigger on failed breakout
- Pivot Point Level Rejection
- Daily/Weekly pivot levels
- When price approaches but rejects
- Many traders use pivot points
- Could trigger on pivot point rejection
The key elements these all share:
- Clear price levels traders watch
- Failure of expected move
- Psychological impact on traders
- Potential for cascading orders
- Measurable risk levels
- Clear entry/exit points
