Advanced Trading – The Tap Pattern
The tap pattern is a pattern I use to identify short selling opportunities. This is a pattern that I have identified through my own analysis and one I use extensively in my own trading. It provides high probability trading setups with excellent risk to reward ratios.
Criteria for a tap pattern:
⦁ The pattern commences with an impulse up move. This is a steep, fast and short lived up move.
⦁ A rejection bar forms at the top of the up move, usually in the form of a candlestick tail.
⦁ The price retraces before a second up move.
⦁ The second up move is shallow and can’t reach the previous high. The failure of this second up move is the entry signal.
⦁ Preferably the pattern forms in a longer term downtrend and below a longer term moving average. But tap patterns can also from in uptrends.
The first steep impulse coupled with the second more rounded up move creates the appearance of a tap. The trading opportunity is the subsequent fall in price (the water flowing out).
Watch the video to see how to find them.
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