The ACR set up

Ascending Channel Reversal: The simplest and the lowest risk set up for positional and long-term investors.

ACR set ups shared real time.

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A 5 minute read

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Dear Aspiring Peak Traders,

Today I am going to teach you a set-up which is suited more for the long term investors and positional players. The set-up, as the title suggests is called ACR. It stands for Ascending Channel Reversal.

You will learn:

• What is ACR?

• 4 pre-requisite for an ACR.

• Entry.

• Exit and average up points.

• Current examples.

• Too good to be true? Past examples.

• Scanner for ACR.

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What is the ACR set-up:

Stocks during their stage 2 journey tend to move within an ascending channel. The channel support provides an excellent entry point, while the channel resistance offers a great point to exit or partially exit the position. This is the simplest basis of ACR.

ACR works on all timeframes (so does everything else in TA because of the fractal nature of the markets), but in my experience the best timeframe to use would be daily and weekly, and therefore more suited to positional and longterm holding.

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4 pre-requisite in a stock for an ACR:

1. The stock is in a confirmed early Stage 2 (why early?)

2. Close above (or around) key moving averages viz 200 DMA & 50 DMA.

3. Moving inside a clear Ascending channel.

4. The supporting trend-line has at least 2 touch points.

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Entry Trigger:

Anticipation entry: once the price takes support on the trend line an early entry can be made in anticipation of the reversal (Looks for hidden bullishness like lower wicks).

Confirmatory entry: Once the price bounces from the trend line support with a bullish candle, a confirmatory entry can be made.

STOPLOSS will go below (0.5-1%) the low of the swing low candle for both.

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Examples of ACR setting up in the Indian market currently:

1. Vaishali Pharma

2. Wendt

Vaishali pharma is testing the Support and yet to confirm the reversal. An entry now would be an anticipation entry in anticipation of the reversal. This provides a lower risk (i.e smaller STOPLOSS) but with a higher chance of set-up failure.

Wendt, on the other hand has reversed from the channel support and an entry now would be an confirmatory entry of the reversal. This would offer you a deeper STOPLOSS but with a higher probability of a successful trade.

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When to exit and average up?

Price hitting the channel top is a signal to exit the trade or at least partially exit (longterm investors can hold till the trend exists). One can enter again when the price corrects to the channel bottom.

This subsequent test of the channel support/bottom is an excellent spot to average up on your existing trade. I have to caution you here that not all stocks will correct and test the channels forever. So don’t be selling everything at the top in the hopes of buying at the bottom.

Often times, stocks will breakout of the already bullish ascending channel. I call this price action a bullish on bullish (BOB) breakout (article on BOB someday soon)

Cyient today had a BOB breakout. You will notice that Cyient also did provide excellent ACR entries on late Feb and mid March 2023. Wow

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Too good to be true?

Now you must be thinking, hold on! This is so simple, it can't be true. Surely this doesn't work.

Since I formulated ACR a year ago (thanks to Murugan from the Trendline investor on twitter for all the inspiration), I have been sharing peak ACR set ups non stop on twitter. Safe to say that majority of them have worked and given amazing returns. You can find notable mentions like TWL, TDPower systems etc in the gallery at the top.

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How do you scan for ACR?

Manually.

But if you don't have time and believe in scanning (like me), you can use a simpaal CCI based scanner (shoutout to Murugan again for introducing me to CCI. I learned to use CCI scanners from him) which will cut short your scan time from multiple hours to just 2 minutes. (Well less than 2 minutes)

Here is the ACR scanner,

Not all will be ACR, and not all ACR will be caught by this.

https://chartink.com/screener/sakatasacr

PS (edit on 5th October 2023): this scanner does a very poor Job. Go find your ACR manually.

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That's all for this weekend folks.

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