My entry criteria are simple. As you might expect, the trade has to be in the same direction as the daily trend. For the sake of illustration, let?s say that day-to-day price movement is experiencing upward momentum.

I simply wait for price to pull back below the floor of the intermediate (grayish) envelope, and then enter a long position upon the formation of the first green candlestick, or the first candlestick that finds its way back inside the ?fast? (white) envelope. (See the image below.)

My stop loss is set slightly below the lowest candlestick shadow in the area, and I exit the trade when price hits the top of the fast envelope (if I?m being conservative). If I?m willing to be patient and risk a loss in order to reap a much more substantial gain, I place my take profit target so it corresponds with the ceiling of the intermediate envelope. (Of course, my reward-to-risk ratio has to me a minimum of 1:1.)