Building entry and exit rules from pivots, channels, and abc-corrections

Confirm each pivot-point before the swing is measured

A pivot-point is the highest or lowest print of a swing. It is confirmed only after price later penetrates the opposite extreme of that extreme bar. A swing is the path from one confirmed pivot-point to the next. Successive confirmed extremes bound each swing.

Write the long as a fraction of the parallel-leg projection

In a parallel-leg projection, the next impulse away from the latest pivot-point is treated as equal to the prior impulse between the two earlier pivots. A long is considered only after price has already advanced 25 percent of that projection from the latest pivot-point, and the initial stop is placed under that pivot.

Once that long is open, the stop is moved to the entry after 50 percent of the projected distance is complete. After the prior impulse high is exceeded, a trailing stop of 25 percent of the projected C-to-D distance is used. The measured D level is an explicit exit location.

Enter on channel reactions, not on a new extreme

A price-channel is built by connecting two successive high pivots and two successive low pivots. The interior reaction and rally fractions of that width become the written entry, stop, and objective levels. Intended entries are the reaction and rally points on those channel boundaries rather than a new high or a new low. A new high or a new low is described as the least favorable entry location during a corrective pause.

Start with a channel-width stop and reduce at the written fractions

A price-channel trade starts with a channel-width stop, an initial protective distance equal to the vertical width of the constructed price-channel, placed one channel-width from the entry. That stop is moved to the entry after price has traveled 50 percent of the remaining distance to the swing objective. In an uptrend, shorts are covered at the 50 percent reaction and longs are reduced at the 75 percent rally. Those 50 percent and 75 percent pairings are reversed in a downtrend.

Defer the entry when the first countertrend day is already deep

If the first countertrend day already covers 50 percent of the price-channel width, the later entry is deferred to the 75 percent point of that width. On a second day against the trend, only the 50 percent reaction in an uptrend or the 50 percent rally in a downtrend is used, and the exit is placed at the prior pivot-point.

Fade an anticipated abc-correction, or delay the cover

An abc-correction is a three-leg countertrend structure in which the C leg is expected to stall near the A pivot, so a fade and a measured fractional exit can be specified before the C print completes. An anticipated abc-correction is faded by shorting the move into C at the price of pivot-point A and taking profits at 75 percent of the distance from the earlier reference pivot to C. If an abc-correction has already completed to the upside, a later short waits for a second down day before covering.

Add a complementary short only under the open and the prior close

A complementary pivot-point short places a sell stop 25 percent of the A-to-B distance below C, and only if that trigger also sits under the session open and the prior close. The cover is at B or the swing objective.