How to Trade Pullbacks With Market Structure

TL;DR

Trade in the direction of the higher-time-frame trend, then wait for price to pull back toward a previous structure level instead of chasing a lower low or higher high. The strategy uses support and resistance, psychological price levels, lower-time-frame confirmation, stops beyond prior structure, and profit targets at subsequent structure points, but the source warns that currency trading can result in a total loss.

Transcript

all right so we're about to head now to uh my boy cody's house so i've been trying to get this guy on a podcast for like two months he went like on a private trip with grant cardone to like mexico or something so he finally came back so we're about to take a drive up north he stays about like an hour hour and a half from where i am at so i'm gonna ... Read More

Key Insights

• Higher-time-frame alignment is the strategy's primary filter: the trader looks for sells when the broader trend is down and buys when it is up. Countertrend positions are avoided because the presented method considers them less favorable than trades moving with the prevailing market direction.
• Market structure is classified through swing sequences: higher highs and higher lows define bullish movement, while lower highs and lower lows define bearish movement. A lower low that breaks previous bullish structure is treated as evidence that the earlier bullish sequence has ended.
• Former support can become resistance after price breaks beneath it. The trader looks left for repeated reactions around the same zone, including earlier support and resistance, to judge whether the level has been respected enough to serve as an area of interest.
• A pullback is preferred over chasing an extended move. When price is already at a lower low in a bearish trend, the method waits for price to return toward the next lower-high area before considering a sell, potentially improving entry placement.
• Lower-time-frame analysis is used to refine an entry after price reaches a higher-time-frame area of interest. A daily wick can contain visible structure on the four-hour or 30-minute chart, where rejection candles or structural shifts may provide entry confirmation.
• Stop placement is tied to previous structure rather than an arbitrary pip count. In the example, the stop sits above a prior structural level, while the first profit target is placed at the first structure point where price could react or permit an exit.
• Profit objectives are evaluated through percentage returns and risk-to-reward ratios rather than pips alone. The speaker cites example outcomes of 1-to-3.5 and 1-to-4, describing their combined result as a seven percent gain within one week.
• Small-account growth involves substantial failure risk under the approach shown. The planned trading challenge explicitly accepts heavy account risk and a high chance of blowing the account, while the description warns that foreign exchange trading may cause loss of some or all invested funds.

Questions & Answers

Q: How do you identify a bullish or bearish market trend?

A bullish trend is identified by a sequence of higher highs and higher lows, while a bearish trend is identified by lower highs and lower lows. The strategy also watches for breaks in that sequence. If price forms a lower low beneath previous bullish structure, the break is treated as evidence that the market has shifted away from its earlier bullish pattern.

Q: How do you trade a pullback in a bearish trend?

First confirm that the higher-time-frame trend is bearish, then avoid selling while price is already sitting at a lower low. Wait for price to pull back toward the next lower-high area or a former support zone that may now act as resistance. Once price reaches that area, use lower-time-frame rejection or a structural shift to evaluate a sell entry.

Q: Why should traders avoid chasing a lower low?

Selling at a lower low means entering after price has already extended downward, which the presented strategy characterizes as chasing the trade. The preferred alternative is to wait for a daily candle to close and for a later wick or structured pullback to revisit resistance. That return may create a more deliberate entry near the next lower-high structure.

Q: How are support and resistance used in this strategy?

Support and resistance are used to define areas of interest and directional context. The trader reviews earlier price action for repeated reactions at a zone. When price is above the zone, the approach looks for buying conditions; when price breaks beneath it, the same area may become resistance, creating a location where a bearish pullback could produce a sell setup.

Q: How do lower time frames help confirm a trade entry?

Lower time frames reveal detail that may appear only as a wick on a daily chart. After price enters a higher-time-frame area of interest, the trader moves to charts such as the four-hour or 30-minute view to inspect the pullback's structure. Rejection candles and a shift in structure are cited as possible signals for refining the entry.

Q: Where should stops and profit targets be placed?

The example places the stop beyond the previous structure level, such as above prior structure for a sell. The first profit target is set at the first upcoming structure point because that area could produce a reaction or offer an exit. A later target may be based on a daily structure point, allowing the trade to pursue a larger risk-to-reward outcome.

Q: Why does the strategy focus on percentages instead of pips?

The speaker says pips are not the main measurement used for these trades and instead evaluates outcomes through percentage returns and risk-to-reward ratios. The examples include trades returning 1-to-3.5 and 1-to-4. According to the presentation, achieving both would equal a seven percent gain within one week, regardless of the raw pip distances involved.

Q: What are the risks of trying to grow a small forex account quickly?

The source presents rapid account growth as possible but explicitly acknowledges a high chance of blowing the account when a large portion is risked. The description also states that foreign exchange trading is highly speculative, prices may become extremely volatile, and traders can lose some or all of their initial investment. It advises consulting a financial professional before making investment decisions.

Summary & Key Takeaways

• The strategy begins by aligning trades with the higher-time-frame trend. A sequence of higher highs and higher lows is treated as bullish, while lower highs and lower lows indicate bearish conditions. A break below prior structure can signal that a bullish sequence has shifted into a bearish one.

• After identifying direction, the trader marks well-respected support and resistance zones. When price breaks below support, that former support may become resistance. Rather than selling immediately at a lower low, the approach waits for a pullback into the zone and seeks a sell from the next lower-high structure.

• Entries are refined on lower time frames using evidence such as rejection candles or a shift in structure. Stops are placed beyond previous structure, while profit targets use nearby and daily structure points. The presentation emphasizes percentage returns and risk-to-reward ratios, while acknowledging that aggressive account growth carries a high chance of failure.