Week 3: The Signal – Reversals & Continuations

You know how to spot energy (Inside Bars) and you know the direction (The Ribbon). Now, you need the specific signal to pull the trigger.

In The Strat, we don’t guess bottoms or tops. We wait for the candles to tell us the story.

1. The Reversal (The “2-2” Reversal)

This is how we catch the turn. Most traders try to catch a falling knife. We wait for the knife to hit the floor and bounce.

The Bearish 2-2 Reversal (Top of trend):

1. Candle A: A Green Directional Bar (2) going UP.
2. Candle B: A Red Directional Bar (2) going DOWN.
3. The Trigger: When Candle B breaks below the LOW of Candle A.

The Bullish 2-2 Reversal (Bottom of trend):

1. Candle A: A Red Directional Bar (2) going DOWN.
2. Candle B: A Green Directional Bar (2) going UP.
3. The Trigger: When Candle B breaks above the HIGH of Candle A.

2. The Continuation (The “2-1-2”)

This is the “Trend Following” signal we practiced in Week 1. It is safer than the Reversal.

• The Pattern: Trend Move (2) -> Pause (1) -> Continuation (2).
• Why it works: The pause (Inside Bar) shakes out weak hands, then the trend resumes with force.

3. Time Frame Continuity (Full Alignment)

Before you take ANY signal (2-2 or 2-1-2), check the “Full Alignment”:

• Monthly: Green?
• Weekly: Green?
• Daily: Green?
• Signal: Buying a 2-1-2 Breakout?
• Result: High Probability “Sniper” Trade.

If the Monthly is Red and you are trying to buy… you are the liquidity.