Barky's Diagonal Entry Model
The Ultimate Reversal System
Once upon a time, there was a trader named J. Not the J. from X, but just J, a nice guy with lots of trading experience that wanted to learn more about Elliott Wave theory. EW has been my specialty for a good 4 years now, and even though the waves are useless if you want to invest or trade, my work with waves has consistently proven to confirm, which is what drew J towards me.
He silently followed me for a while, until one day, he saw me in the woods, kicking dirt in frustration, wondering how I could anticipate which M5 break outs were likely to fail, and which ones had the high probability. J invited me to his campfire, offered me a beer, and told me about a phenomenon called Fair Value Gaps. J shorted M5 break outs into bearish FVGs for a scalp. A single candle trade. My mind was blown, and I had so many questions, but then the local bard arrived, and played music for us all night, while the beer kept flowing.
Fair Value Gaps… J mentioning them really set off my analysis spree. His pointer triggered all of my discoveries this year. I take full credit for my own work, but there is no such thing as a self made man.
Many of you have been following me for years. Even more of you have been following me through the entire journey that 2023 has offered me. The discovery of my signature model, the M5 Scalp, was the breakthrough.
I recently joined forces with EnhancedMarket to take on the role of Educator in the TradeProElite group. EM works with diagonals, and capitalises on the initial break out volatility when he gets his setups. The similarities between his and my work are striking, and our work is very compatible. But while I mostly execute on the M5, his setups form on M15 or even H1 or D1. That was my ambition. Trade the M5 while waiting for H4 or D1 to setup. At the same time, EM’s work made me realise that diagonals had more to offer than just scalps.
I decided to explore the M5 Scalp parameters on higher timeframes, and discovered that the same setup model had huge potential. There is a consistency between break of trend, entry diagonal and target diagonal, as long as the latter aligns with the EMA34/50 on that specific timeframe. If not, there are horizontal levels to consider. FVG’s, control bars, resistance, support, after all, supply and demand is much easier than trying to wrangle an entry. Right?
Let’s get to it!
Concept
What my signature Diagonal Entry Model does, is allow an informed entry into a counter-trend move, so, a trade against an existing trend. That means price will either bounce and reject at the target, or it will set up continuation at or above the target.
Continuation setups allow to trail the stops on an informed basis. This is simply logic, because when a continuation setup fails, it could lead to a reversal.
When all criteria are met, this setup has a high probability of following through.
Parameters
First of all, what I really want to see, is a large trend move. It doesn’t have to be as big as the one in the chart below, but I want to make it clear, and I can’t insist enough, that this setup, on higher timeframes, is not designed to take entries inside consolidation ranges. I use the M5 scalp to play ranges. So make a note: trend is key.
Here is how that looks: