This was a trade which strengthen on the concept of mean reversion, price exhaustion on strong SAR levels.
Hence my criterias in trading falling knife trades:
1. Strong SAR , d1 pivot support in this case.
2. Mean reversion, price exhaustion on the next day open.
3. ideally price should be attempting to make a downmove in early session to reach extreme exhaustion before the London session in order to create a Wash and Rinse.
4. Pos size reduction is a good risk management to endure some more downmove before price can rebound aggressively,
Trade first sighted after 2 straight days of plunge. I noticed there was a good d1 pivot support. I endured a days worth of paper loss before price resumed in my favour.
Trade outcome +110
I took profit as after this was still extremely bearish momentum. There could be several upwaves before price could resume upwards. tp is good.
Powerful upmove. Nailed the direction of this trade correctly.
Mean reversion trades needs to be used in tandem with strong SAR, and some notions of WR with price exhaustion.