5 Tips to trade M and W reversal patterns:

  1. Only trade M’s off the highs, and W’s off the lows

  2. Only trade M & W formations London & NY Session

  3. Wait for the second leg stop hunt to the high/low of the day to confirm entry

  4. Asian consolidation range should be very well defined

  5. 5. Always use proper risk management, if the Risk reward ratio is less than 1:3+ the trade is not worth taking

Moments after entering into the market and you are already experiencing a massive return, stops are placed at break even and you can relax for the day knowing you are no longer at any risk of loss. This is how it feels to take a Forexia style reversal trade off the highs or lows.

How many times have you bought into a breakout of the highs only to see the market instantly reverse against you? How many times have you bought or sold the break of a “support or resistance” , then the next candlestick moves straight for your stop loss? Almost like the market knows exactly when you are entering and does the exact opposite just to piss you off.

I was on the brink of giving up trading when one day a question popped into my head, “Why am I using the same information as the losing masses?

I thought to myself, “If I am using the same info as the masses, and they are consistently using, what would happen if I did the exact opposite as I was taught?

We are taught to blindly buy into an instrument only because it is “breaking out” of an invisible line we place on our chart.

Before I started to trade, I studied human psychology and neuro-linguistic programming. My understanding of human psychology helped me achieve my breakthrough in trading.

You see, as humans, we are always given multiple options. For example, if you don’t like to trade breakouts, you can always trade retests or just simply buy off support and sell off resistance.

The strategy doesn’t matter, whether you are buying into support, selling resistance, or jumping in a trade because there is a breakout.

What matters is you are playing their game with rules they created FOR YOU. To become superior traders we must break this veil and realize that we don’t need to use the rules they have given us. – I personally have not used any type of support or resistance/breakout based trading in years and my trading has enhanced tenfold.

You may be wondering, “Dylan, what do you use to trade if not support or resistance?”

– I use market structure to reverse engineer the retail trader mindset and visualize liquidity on the charts. I suggest taking our FREE M/W COURSE HERE for a greater understanding of how we trade using market structure.

trade M and W formations

The above photo depicts two “M” formation reversal patterns that occur back to back. We see the obvious Asian session consolidation depicted in the pink boxes, the next session is London session which we know as the induction or breakout session.

Each day there is a new high and low that is created. The “M” formation reversal pattern occurs at the highs and the “W” formation reversal pattern at the lows.

These patterns occur on all scales and on all timeframes. The timeframe above is the 15m, here we can clearly see the structure of the different sessions that occur on a daily basis.

Asian session consolidates for an extended period of time in order to “break out” of the pre-created consolidation shortly after during London session inducing retail traders that depend on their breakout strategy. The breakout traders are induced to buy or sell in the direction of the breakout, shortly after the market will reverse and hit the stops of the dumb money.

The best sessions to trade are London Session and New York Session. These sessions will present the best reversal setups. Asian session should be avoided as there is very little movement.

trade M and W formations

Above we can see another great example, this time of the New York session reversal setup after an extended period of Asian consolidation.

This is a universal guide to trading M and W formations on any pair in Forex. This works on all timeframes under the daily timeframe. We recommend backtesting everything we have highlighted in this post for greater clarity of the power you are tapping into! 💪


Understanding Asian session consolidation

Asian session consolidation normally consists of price ranging back and forth in the same zone for an extended period of time. This consolidation period can range from 8 to 15 hours. Trying to trade M and W formations inside of this consolidation is a huge no-no! 

How to trade the W pattern.

The M and W pattern is the most lucrative trading strategy that exists. The W pattern is very simple to understand when you can put the confirmations together. 

A valid W pattern is found only at the low of the day during either London or New York session.

The Asian session is known as the consolidation session which traps traders who use support and resistance to trade. After creating a clear consolidation range, the price will then break out of this consolidation. This breakout causes the masses to enter positions in the direction of the breakout hoping to catch the trend or “continuation”. After the majority of the masses have committed the dealer then moves in the opposite direction of the breakout trapping those who have already committed into the direction of the breakout.

trade M and W formations
“W” Formation reversal pattern off the low of the day NY session
trade M and W formations

Here is another example above of the extended Asian session consolidation, the London session breakout and the “W” formation reversal off the low of the day.

Asian session consolidation is used as the comfort zone in which retail traders mark up support and resistance. In the example above we see the London session breakout to the downside causing retail to sell, then New York session reverses the market against the dumb money sellers induced London session.

If you still are having a hard time understanding the concept, please take our course valued at $1,000 , absolutely FREE: CLICK HERE

Tips when trading the W pattern in Forex

  • Always highlight the consolidation of Asian session
  • Only look for W patterns off the low
  • Only trade W patterns after breakout of Asian consolidation
  • Never trade a W pattern in Asian session

How to trade the M pattern.

The M pattern is the exact same as the W pattern with the only exception being all the rules are inverse. 
A valid M formation is only found at the high of the day after Asian session. The breakout in this case is also extremely necessary to induce the masses in the wrong direction. 

trade M and W formations
Prefect INVERSE example of the previous example above.
trade M and W formations
London Session “M” formation off the high of the day reversal
trade M and W formations
NY Session “M” formation off the high of the day reversal

The concept of trading M and W patterns

The masses may be dumb, but they are not that dumb. They will always continue to look for confirmation in order to validate their trades. So, we must understand the reverse psychology behind why the M and W pattern is such an effective reversal strategy.

The confirmation that the masses use to determine a trend is the creation of higher highs and higher lows in the case of an uptrend. In the case of a downtrend, the masses look for lower highs and lower lows to make their confirmation.

The neckline of the M or W pattern will always be where the lower high or higher low is formed. Above we can see that after the neckline lower high has been created there is a volatile move past the low and a lower low is created. This lower low is what induces the retail mainstream world to “confirm” a downtrend has started and the majority of traders will be induced in the exact opposite direction.

Tips & Confirmations to trade M and W patterns

  • Always highlight the consolidation of Asian session
  • Only trade off the highs 
  • only trade M patterns after the breakout of Asian consolidation  
  • never trade an M pattern in Asian session 

When learning to trade M & W formations one always has to take into consideration the confirmations that are used to validate if the M & W formation is worth taking. The goal is to get a zero drawdown entry by taking our trade off the exact high of the day. M or W pattern trading is otherwise called the double top or double bottom. However, when we speak about the M or W pattern we want you to understand that it is much more than just a “double top” or a “double bottom” pattern. We have an entire world of confirmations that are used in conjunction with validating an M or W setup.

List of confirmations to validate an M or W pattern.

trade M and W formations
NZD/USD JULY 22, 2020

Above we can see 8 different confirmations for this single trade. This is a perfect example of the zero drawdown strategy put into action with multiple confirmations to back up your thesis. The next time you analyze the for M or W formations be sure to take these confirmations into mind and remember the more confirmations the better.

Below is a list of all the confirmations seen in the screenshot above.

  1. Clear Asian consolidation range
  2. Price “working off” the previous high (high of the week/high of the previous day)
  3. Price “working off” the previous high (high of the day)
  4. “M” formation on Micro
  5. “M” formation on Macro
  6. London Session retest to the high
  7. Volatile induction (Second leg retest to the high)
  8. #SignatureTrade Wedge pattern formation

Now we have a clear vision of why the market did what it did. Clearly a reversal was pending and we just connected the dots by stacking confirmation on confirmation.

Many more confirmations exist to help you to validate the trade. In our next blog post we overview the many different confirmations that exist.

326 PIP #SignatureTrade Setup with 9 Different Confirmations

trading m and w patterns
EUR/AUD JULY 22, 2020

Above is a setup that could be framed and hung on a wall in my bedroom to be looked at and admired for a lifetime. Our #SignatureTrade weekly reversal structure is my personal favorite setup. The risk vs reward potential on these setups far surpasses any other type of M or W trade formations.

What makes our #SignatureTrade different from other M and W formations is the wedge pattern located in the middle of the structure and also the many confirmations that we use to validate the pattern.

  1. S/M/T Induction Trend
  2. ADR Met Tuesday
  3. Asian Session Consolidation
  4. Low of the week
  5. #Signaturetrade wedge pattern
  6. Micro “W” Formation off the low of the day & previous low
  7. Stophunt occurred at exactly London session
  8. Macro W formation off the low of the week
  9. Volatile second leg stophunt
trading m and w patterns with major accuracy

Now we have a clear vision of why the market did what it did. Clearly a reversal was pending and we just connected the dots by stacking confirmation on confirmation.

Many more confirmations exist to help you to validate the trade. In our next blog post, we overview the many different confirmations that exist.