I will teach you 2 simple strategies for trading Candle Range Theory on US30 Index with SMC.
I will show you the efficient CRT price models and explain different ways to identify a profitable confirmation entry signal.
The core of profitable CRT trading is the selection of a proper candlestick.
No matter what entry strategy you will use, the rules and conditions of a candle that you will trade will be the main element.
So let me start with explaining how I pick the perfect candle.
The first important condition to be met is a strong imbalance.
Our perfect candle will be an imbalance bullish or bearish candle
with a large body and relatively small wicks.
The second condition is a trap and a liquidity grab beyond the range of that candle after it closes.
That is the example of such a candle on US30 index on a 4H time frame.
We see a strong selling imbalance candle with a large body.
After this candle closed, a trap below its low occurred.
We will trade ranges of only such candles.
Once these 2 conditions are met, you can look for entry signals with these 2 strategies.
Strategy 1
With this strategy, we will use the same time frame for the identification of an entry signal.
I suggest waiting for the start of a consolidation and a weak momentum after a trap.
The price will likely start coiling within a horizontal range.
In this range, an accumulation of trading volumes will likely occur.
Your signal to buy will be a breakout and a candle close above a resistance of the range.
That will confirm that the accumulation is completed.
- TP will be a couple of pips below a candle opening level.
- Stop loss will be below the low of the trap.
Strategy 2
With this strategy, we will use lower time frame analysis for the identification of an entry signal.
If we spotted a candle for CRT trading on a 4H, we will look for a signal on an hourly time frame.
On an hourly time frame, we will need to do a market structure mapping and search for a bullish change of character CHoCH as an entry signal.
It will confirm a violation of a minor bearish trend and signify a strength of the buyers.
- Entry will be after a pullback on a retest of a broken level of the last lower high.
- Stop loss will be below the lows of the trap.
- Take profit will be based on a 4H candle opening level.
Strategies' Strengths & Weaknesses
Entry strategy on the same time frame is way easier and provides a higher accuracy.
At the same time, a lower time frame confirmation will provide an entry signal earlier, giving a way better reward to risk ratio.
Also, remember that with the analysis of multiple time frames, there will always be a higher chance of an occurrence of a signal and a consequent entry.
Personally, I prefer a top-down analysis entry strategy for CRT trading.
If you are a beginner, though, start with a single time frame analysis as it is more straightforward.
The final result of the setup that we analysed on US30 is the following:
While an hourly time frame analysis provided a perfect entry confirmation, a 4h time frame analysis did not provide an entry opportunity as the price did not retest a broken resistance.
Try both entry strategies and pick the one that is more suitable for you.
Thanks for reading.
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