Half retrace entries after the London impulse on EURUSD, no indicators, just the 50 percent line

[Fairman]

Half retrace entries after the London impulse on EURUSD, no indicators, just the 50 percent line

about the cleanest thing I trade. London opens, price makes an impulse move of decent size over maybe twenty to forty minutes, and I draw a simple line from the start to the end of that move on M5. Then I wait for price to pull back toward the middle of it.

I'm not looking for exactly fifty percent. I treat the area from about forty to sixty percent as a zone. When price gets in there and I see a rejection candle, like a wick away from the zone and a close in the direction of the impulse, I take the entry. Stop goes beyond the sixty five or seventy percent area, and if price closes beyond the start of the impulse the idea is dead.

Target is the end of the impulse, with a piece left for an extension. What makes it work for me is the impulse has to be real: strong candles, little overlap, a clean break of earlier structure. If the move was choppy, a half retrace means nothing.

Time wise I trade it between about 08:00 and 10:30 GMT. Later it doesn't line up as often.

[Fairman]

How I draw the line in practice. On TradingView I use the Fibonacci tool but delete every level except 0.4, 0.5 and 0.6, so the chart only shows the zone I care about. The anchor points are the low and high of the impulse, using wicks, not bodies. If I am unsure where the impulse started, it usually means the move was not clean enough in the first place, and I skip it rather than fiddle with anchor points until it looks right.

[Fairman]

The extension piece I mentioned is simple. When price gets back to the end of the impulse, I close most of the trade and leave a small part with the stop moved into profit. If the move continues, I let it run toward the next obvious level from the previous day. If it stalls and drops back, I lose almost nothing on that small part. Most of the time the end of the impulse is where the trade really finishes, so I do not count on the extension at all.

[Fairman]

Something I watch while waiting for the pullback is how price gets there. If it drifts down into the zone with small overlapping candles, that is what I want, because it looks like profit taking. If it falls into the zone with one or two big candles, I am a lot more careful, because that can be the start of a real reversal. In that case I want a clearer rejection and sometimes a second candle confirming before I commit.