Market Makers Baited Traders Into Perfect Reversals

📌 Review of February 18 Trades – BTC/USD
1️⃣ Trade #1 – Long at Previous Day Low Rejection & Bullish Wedge
📍 Context:
* The market was in a broad bear channel, making lower highs and lower lows.
* The price tested the previous day’s low and showed signs of rejection, forming a wedge bottom (a common reversal setup).
* The exponential moving average (EMA) was far above the price, suggesting a possible reversion to the mean.
📍 Two Reasons for Entry (Al Brooks Style):
1. Rejection at Previous Day’s Low:
* The price dipped below the previous day’s low but failed to break decisively, showing exhaustion.
* Large bear bars started shrinking, followed by small-bodied bars, signaling bearish momentum weakening.
2. Bullish Wedge Formation:
* The market formed three pushes down (a typical wedge reversal pattern).
* The final push had a strong bullish reversal bar, trapping late sellers.
📍 Execution:
* Entry: Buy at the wedge bottom after confirmation of a strong bullish bar.
* Stop-Loss: Below the wedge low.
* Target: The high of the day (HOD).

2️⃣ Trade #2 – Short at High of Day Stop Hunt & Bullish Wedge Failure
📍 Context:
* After the bounce from the previous day’s low, the market rallied into the high of the day.
* A break above the high of the day triggered stops, but there was no follow-through → Likely a stop hunt (a common bull trap).
* The bullish wedge breakout attempt failed, leading to a sharp sell-off.
📍 Two Reasons for Entry (Al Brooks Style):
1. Stop Hunt Above the High of the Day:
* The price broke above the high of the day but immediately reversed, trapping breakout buyers.
* Strong bearish bars followed, indicating heavy selling pressure.
2. Failure of Bullish Wedge Breakout:
* The bullish wedge formed higher lows, but the breakout failed.
* Instead of continuation, a large bearish bar closed below the wedge, signaling a downward breakout.
📍 Execution:
* Entry: Sell below the first strong bearish bar after rejection at the high of the day.
* Stop-Loss: Above the high of the day.
* Target: Exit based on price action—Microwedge formed, indicating potential exhaustion.
* Reason for Exit: After a strong drop, a series of overlapping small bars (microwedge) formed, signaling possible reversal or slowdown.

📌 Key Lessons from These Trades
✔ Al Brooks' "two reasons for entry" rule was effective:
* First trade: Rejection of the previous day’s low + Wedge Bottom → Long worked.
* Second trade: Stop Hunt at the high of the day + Wedge Failure → Short worked.
✔ Failed breakouts offer high reward-to-risk trades when confirmed.
✔ Micro Wedges often indicate exhaustion—good place to take partial or full profit.
✔ Always wait for price action confirmation before entering.
🚀 Both trades followed structured price action logic and resulted in strong moves.