LenQuant identifies several common trading setup patterns. Understanding these setups helps you know what kind of price action to expect and how to trade them effectively.
Trend Continuation Setups
Setups that suggest the current trend will continue:
- Pullback Continuation: Price retraces to support/resistance within a trend, then bounces. High probability in strong trends.
- Breakout: Price breaks through a key level with momentum. Good when combined with high ADX.
- Momentum: Strong directional move with increasing volume. Trade in trend direction with trailing stops.
Reversal Setups
Setups that suggest a potential trend change:
- Double Top/Bottom: Two peaks/troughs at similar levels. Watch for confirmation before entry.
- Divergence: Price makes new highs/lows but momentum doesn't. Often precedes reversals.
- Exhaustion: Extended move with declining momentum. Higher risk, needs confirmation.
Range Setups
Setups in sideways markets:
- Range Bounce: Price bounces between support and resistance. Trade the bounces with tight stops.
- Range Break Anticipation: Watch for signs the range will break. Position before the breakout.
- Mean Reversion: Overextended price returns to average. Good in low ADX environments.
Understanding Setup Confidence
Not all setups are equal. LenQuant assigns confidence based on:
- Alignment with higher timeframe trend
- Supporting volume and momentum indicators
- Clean price action without noise
- Distance from key levels
- Current market state compatibility
💡 Pro Tips
- •The best setups align with the prevailing market state
- •Higher timeframe setups are generally more reliable
- •Always wait for confirmation—don't anticipate
- •Combine setups with grade and risk flags for full picture
