AS4 Strategy

The AS4 strategy is designed to be used at the start of a strong market movement, specifically during a price spike. This usually happens after a liquidity grab, where price moves sharply in one direction, pulls back slightly, and then continues in the same direction.

Note: This setup occurs frequently in the Dow Jones because its price movements tend to be very spiky, making AS4 opportunities more common in that market.

1. Evaluating the Spike

Before doing anything, the spike itself must be evaluated.

A valid spike should:

  • Originate from a trading range

  • Contain more than three candlesticks

  • Show strong momentum (not weak or choppy movement)

The spike should look impulsive and intentional. If the movement looks messy or slow, it’s not a good setup.

Once the spike is confirmed, draw a horizontal line at the extreme of the spike (the high for buys, the low for sells).

2. The Pullback

After the spike, price will usually form a pullback.

This pullback must be:

  • Small

  • Nowhere near 50% of the spike

  • Just a slight retracement before continuation

A deep pullback means the move is losing power. AS4 only works when momentum is still strong.

3. Break & Entry Candle Conditions

When price breaks the spike line again, you wait for the first candle that fully closes above the level.

That candle must:

  • Have a full, strong body

  • Close clearly beyond the line

  • Not touch the 20 EMA

  • Not react with any major levels or surfaces

You must wait for the candle to close before entering.
Entering mid-candle is risky because price can easily fall back below the level.

4. Entry & Stop Loss

  • Entry: At the close of the breakout candle

  • Stop Loss: Behind the entire pullback

The stop is not tight. It covers the full pullback to protect against fakeouts.

5. Measuring the Legs

Before committing to the trade, you measure the legs of the move.

You check:

  • If the impulsive legs are consistent

  • If the structure makes sense

  • If the move still has room to continue

This helps confirm that the market is still in a healthy continuation phase and not running out of strength.

6. EMA Timing Filter (Gold-Specific Rule)

Even if all technical conditions are met, you still need to analyze the market context.

One key filter is the last time price touched the 20 EMA:

  • If the last touch was 10–15 candles ago, do not take the trade
    → Price usually wants to return to the EMA

  • If the last touch was 4–5 candles ago, the setup is much stronger
    → The move still has momentum

keep in mind that this rule is specific to Gold (XAUUSD) and does not necessarily apply to other markets.

7. Take Profit Expectations

Because AS4 often happens near the end of a spike, targets must be realistic.

  • TP1: Usually achievable

  • TP2: Risky

Holding for extended targets is dangerous because price is already in a late phase of the move.

Testing & Reliability:
The AS4 strategy has shown a win rate of approximately 90%+ when used correctly.
This high success rate is mainly because AS4 focuses on small continuation trades in the direction of a strong trend, rather than aiming for large moves.

Since the trade targets are smaller, price often moves far enough to reach 1R even if there is some short-term pullback.

However, correct stop-loss placement is essential.
The stop loss should always be placed behind two clear support/resistance levels to avoid being stopped out by minor price fluctuations.

When used with proper market analysis and disciplined risk management, maintaining a 90%+ win rate with AS4 is achievable.