The 2618 trade is essentially a less aggressive approach at entering the classic double top/bottom pattern. It uses trend continuation type of entry in order to get involved in a
counter trend opportunity since before entering, the trader seeks confirmation that the trend has reversed. 2-618 stands for a double top/bottom (2), followed by a 61.8 retracement.
When looking for this trade setup the trader must first identify a double top/bottom. After a valid double top/bottom has completed, the next step is for price action to break and close past the midpoint of the fore mentioned pattern. After this occurs, the trader will then look for price action to make a retracement of at least 61.8, pushes back into the previous .
Traders looking to take the 2618 setup are either looking for a less aggressive approach to enter, when they predict that the market is at a turning point, or looking for a second chance toget involved in a trade that they had previously missed.