Three push exhaustion on M1 at session extremes, small trades with a tight idea

[Fairman]

Three push exhaustion on M1 at session extremes, small trades with a tight idea

this is a pure scalp and I keep it small. When price is pushing up into a session high on M1 and I count three distinct pushes, each one with a higher high but weaker candles, I start watching for an exhaustion short. Weaker means smaller bodies, longer upper wicks, less follow through.

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I don't short the third high. I wait until price breaks the low of the last small pullback, then take the retest of that low from below. Stop goes above the third push high. Target is the start of the third push, which is usually only a handful of pips, so spread really matters and I only do it on majors when the spread is normal.

It works best at the end of a London move, say from about 10:00 GMT, or in a quiet part of NY. It fails when the third push is actually the start of a breakout, which tends to happen on news days. If the candles are getting bigger instead of smaller, it's not exhaustion, it's acceleration, and I stay out.

[Fairman]

Since the target is so small on this one, I am strict about the spread. If EURUSD is showing more than its usual spread when the setup forms, I skip it. Same with GBPUSD. The whole trade is a few pips, so one extra pip of spread can wipe out a big chunk of the reward. I also only use limit orders for the entry on the retest so I am not paying extra slippage on top. It is a small trade and it only makes sense when costs are low.

[Fairman]

How I count pushes, because a few people found this confusing. A push is a move up that makes a new high, followed by a pullback of at least a few candles that does not make a lower low than the previous pullback. If price is just grinding up candle after candle with no real pullbacks, it is one push no matter how long it goes on. I am looking for three clear legs I could point at on the chart, not a count I have to squint to find.

[Fairman]

One thing I watch alongside the candles is what the M5 chart is doing. If M5 is still printing strong bullish candles while M1 shows three pushes, I usually leave it, because M1 exhaustion inside an M5 trend is just a pause. The better ones happen when M5 has already started to slow down with smaller bodies and wicks on top. Then the M1 pattern is basically the final part of a move that was running out of steam anyway.