Price Action Setups by Adam Grimes: A Deep Dive

Adam Grimes' Favorite Price Action Setups

Adam Grimes is a master of price action trading. He doesn't rely on lagging indicators. Instead, he focuses on the raw price data to make his trading decisions. Here are some of his favorite price action setups:

The Pullback

The pullback is the most basic and reliable price action setup. In an uptrend, a pullback is a temporary move lower before the trend resumes. In a downtrend, a pullback is a temporary move higher. Grimes looks to enter on pullbacks to key support or resistance levels.

The Engulfing Candle

A bullish engulfing candle is a large bullish candle that completely engulfs the previous bearish candle. This is a effective reversal signal that indicates a shift in momentum from sellers to buyers. A bearish engulfing candle is the opposite.

The Pin Bar

A pin bar is a candlestick with a long wick and a small body. It indicates that the market has rejected a certain price level. A bullish pin bar has a long lower wick, while a bearish pin bar has a long upper wick.

Real-World Example: SPY

On the 4-hour chart of SPY, you notice a clear uptrend. The market pulls back to the 20-period moving average and forms a bullish pin bar. This is a high-probability long setup. You would enter on a break of the high of the pin bar, with a stop below the low of the pin bar.

Entry Rules

• Identify a clear trend.
• Wait for a pullback to a key level.
• Look for a price action trigger, such as an engulfing candle or a pin bar.

Exit Rules

• Take profits at a predetermined target, such as a previous swing high or a Fibonacci extension level.
• Use a trailing stop to lock in profits as the trade moves in your favor.