Module 3 — Lesson 4

The stop hunt is complete. The HOD or LOD is set. The institutions have collected what they came for. Now the reversal is about to begin — and you need to know the exact moment to enter.

That moment is defined by a single pattern. One pattern. Not a combination of seven indicators. Not a checklist of twelve conditions. One pattern that forms at the extreme of every stop hunt, signals that the reversal is underway, and gives you a precise entry point with a defined stop and a defined target.

This is the M and W formation — and it is the most important pattern in this entire method.

M at the top. W at the bottom. The 2nd leg close is your entry. Every time.

Everything in the course up to this point has been context — understanding why the market moves, how the sessions work, how accumulation builds, how the stop hunt executes. All of that context exists to make this pattern meaningful. Without it, the M and W is just a shape. With it, it is a high-conviction trade setup that fires reliably, week after week, on every major pair.

The M and the W — What They Are

The M formation occurs at the high of the stop hunt — at the HOD. The W formation occurs at the low of the stop hunt — at the LOD. They are mirror images of each other. The M signals a bearish reversal. The W signals a bullish reversal. The logic behind both is identical.

M Bearish Reversal — Forms at the HOD The Double Peak Price makes a first push to the extreme — Leg 1. Retraces 30–50% of that push downward. Then attempts the same high again — Leg 2. The second attempt either equals or falls slightly short of Leg 1. When Leg 2 closes with a bearish candle, the entry fires short. The two peaks form the shape of an M on the chart. W Bullish Reversal — Forms at the LOD The Double Bottom Price makes a first push to the extreme low — Leg 1. Retraces 30–50% of that push upward. Then attempts the same low again — Leg 2. The second attempt either equals or stays slightly above Leg 1. When Leg 2 closes with a bullish candle, the entry fires long. The two troughs form the shape of a W on the chart. Why the Pattern Forms

The M or W is not a random technical pattern — it has an institutional explanation. After the stop hunt completes (Leg 1), the institutions begin accumulating their position in the reversal direction. This accumulation pushes price away from the extreme temporarily — the retracement between the two legs. The second leg (Leg 2) is a final test of the extreme — one more attempt to push price back to the hunt level to collect any remaining orders. When that second attempt fails to break the Leg 1 extreme, the institutions have finished. The reversal fires.

Clean M formation at the 50 & HOD — Leg 1, retracement, Leg 2 failing to break Leg 1, entry candle close. NOTE - "W" and "M" just for illustrative purposes found in one day -- doesn't always happen this way. Simply note the double tops and bottoms (M/W) at areas of importance*

The Entry — Step by Step

The entry sequence is precise and non-negotiable. Every step serves a purpose. Skipping a step or taking shortcuts is how clean setups become losing trades. Follow this sequence every single time.

1 Confirm the Stop Hunt Is Complete Before looking for the M or W, confirm the 3-push sequence has completed and the HOD or LOD is set. A pin candle, a volume spike, or a tagged equal high/low — at least two completion signals from Lesson CF-3.3. Do not skip this step. A stop hunt that has not yet completed means the pattern forming is not yet an M or W — it is still the hunt in progress. 2 Identify Leg 1 Mark the extreme of the stop hunt — the HOD for a bearish setup, the LOD for a bullish setup. This is the highest or lowest candle of the entire hunt sequence. Draw a horizontal line at that level. This is your Leg 1 reference — the level that Leg 2 must test but not exceed. 3 Watch the Retracement After Leg 1, price retraces 30–50% of the push back toward the Asian range. This is normal — expected. Do not enter during the retracement. The retracement is the gap between the two peaks of the M or the two troughs of the W. It typically lasts 30–90 minutes and 3–8 candles on the M15 chart. 4 Watch Leg 2 Develop Price turns and moves back toward the Leg 1 extreme. This is Leg 2. Watch it carefully. A valid Leg 2 will approach — but not exceed — the Leg 1 extreme. If Leg 2 breaks cleanly above the Leg 1 high (on a bearish setup), the M formation is invalidated. The stop hunt may be extending. Step back and reassess. 5 Wait for the Leg 2 Candle to Close This is the most important step — and the one most traders get wrong. You do not enter when Leg 2 begins to reverse. You do not enter mid-candle. You wait for the M15 candle at the Leg 2 extreme to fully close. That close is your signal. A bearish close at the Leg 2 high confirms the M. A bullish close at the Leg 2 low confirms the W. Not before. Not during. On the close. 6 Enter on the Open of the Next Candle The moment the Leg 2 candle closes and confirms the pattern, enter your trade at the open of the following candle. Market order or limit — either works. Do not delay and do not wait for further confirmation. The entry signal was the close of Leg 2. The trade is placed immediately after. 7 Place Your Stop Loss Immediately Stop loss goes 7 pip beyond the Leg 1 extreme — not the Leg 2 extreme. Place it the moment you enter. 7 pip is the tight stop. If the Asian range was wide or the stop hunt was volatile, use 23 pip as the standard stop. Never trade without a stop placed immediately on entry. The stop is part of the trade — not an afterthought. The Non-Negotiable Rule

The entry is the close of the Leg 2 candle on the M15 chart. Not the high. Not the shadow. The close. This single rule eliminates the majority of false entries from patterns that look like an M or W mid-development but ultimately extend further before reversing. If you have not waited for the close — you have not confirmed the pattern.

tradewithbanks - lone and ny w and m setup

London uses price under 50 to secure and trap enough volume to 1,2,3 out of the Asia box. M (double tops) form and paints a second Bear (white) candle. Enter at close of the candle

trade with banks - london and ny full M trade setup

Price wastes no time heading directly the the start of the bull run of candles from earlier -- NY, just doing its NY thing

What Validates and What Invalidates the Pattern

Not every shape that looks like an M or W is a valid entry. The pattern must meet specific structural requirements. Knowing what validates it — and what kills it — keeps you out of false setups that cost more than they should.

Criteria	Valid Pattern	Invalid Pattern
Leg 2 vs Leg 1	Leg 2 approaches but does not exceed the Leg 1 extreme. Equal highs are acceptable — Leg 2 touches exactly the same level. A slight undershoot (within 3–5 pip) is also valid.	Leg 2 clearly breaks above the Leg 1 high (on a bearish M) or below the Leg 1 low (on a bullish W). Pattern is invalidated — this is likely an extended stop hunt, not a reversal.
Time between legs	30 minutes to 3 hours between Leg 1 and Leg 2 close. The retracement should take enough time for the pattern to be meaningful.	Under 15 minutes between legs — too fast, likely just candle noise rather than a genuine M or W. Or over 4 hours — the cycle may have moved on to a different phase.
Location on the chart	Forming at the HOD or LOD established by the stop hunt. Directly at the extreme of the institutional move.	Forming in the middle of the range, during Level I or II trend, or away from the HOD/LOD. An M or W in the wrong location is a random technical pattern, not an institutional reversal signal.
The Leg 2 close candle	A clear directional close — bearish close for an M (real body closing below the open), bullish close for a W (real body closing above the open).	A doji or spinning top at Leg 2 — no directional commitment. Wait for the next candle to confirm before entering, or skip the setup if commitment doesn't appear.
Prior stop hunt	The M or W forms directly after a confirmed 3-push stop hunt with at least two completion signals visible.	No confirmed stop hunt preceding the pattern. A double top or double bottom anywhere else on the chart is not an M or W in this method. Context is mandatory.

The Most Common False Signal

The most common false M or W occurs when Leg 2 exceeds Leg 1 by just a few pips — close enough to look valid, but technically broken. When this happens, do not enter. Step back. The stop hunt is likely extending to one more level. Wait for the new extreme to set, watch for a new Leg 2 to form at that level, and apply the same rules. The extended stop hunt variation from Lesson CF-3.3 applies here.

tradewithbanks - asia trade rare exception

Sometimes AUD pairs like to make their move during their normal hours. You can see that triple tops at mid-week reversal gives a massive payout if you notice they accumulated for 2 full sessions. Reversal signals and second leg M again - moves swiftly to cover and make up for all of the Stops being wiped on second legs*

Pattern Variations — Same Logic, Different Shape

The clean textbook M and W are the standard form. The method also recognises three variations that follow the same underlying logic — Leg 1, retracement, Leg 2 attempt, reversal — but look slightly different on the chart. Knowing them prevents you from missing valid entries that don't match the textbook perfectly.

Variation	What It Looks Like	Entry Rule
Railroad Tracks (RRT)	Two consecutive candles of approximately equal size — one bullish, one bearish (or vice versa) — at the Leg 2 extreme. They look like parallel railroad tracks on the chart. The second candle is the reversal candle.	Enter on the close of the second candle (the reversal candle). Stop 7 pip beyond the high or low of both candles. One of the cleanest entry signals in the method — high conviction when it appears at the correct cycle location.
Half Batman	Only one leg forms — price runs from the stop hunt extreme directly into the true trend without forming a clear Leg 2. The retracement is minimal and the reversal fires almost immediately after Leg 1.	Wait for a Level I consolidation break rather than an M/W entry. Reduced conviction — use smaller position size. Covered in detail in the Advanced Patterns module.
The Deep Retracement W/M	The retracement between legs is unusually deep — 60–70% of Leg 1 rather than the standard 30–50%. Looks like a genuine reversal has already started, then price reverses again to test Leg 2.	Same entry rules apply — wait for the Leg 2 close. The deep retracement does not invalidate the pattern. If Leg 2 respects Leg 1 and the close confirms, the entry is valid. Stop remains 7 pip beyond Leg 1.
The Triple Leg	Three attempts at the extreme rather than two — forming an extended M or W with an extra peak or trough. Each attempt fails to exceed the original Leg 1 extreme.	Enter on the close of the final leg's reversal candle. The pattern is still valid — the institutions simply needed more time to accumulate. Three legs that all respect the original extreme is actually higher conviction than a standard two-leg pattern.

Every variation shares the same core requirement — the final attempt at the extreme must close in the reversal direction, and that close is the entry. The shape changes. The rule does not.

Key Takeaways — CF-3.4

The M and W formation is the primary entry signal in this method. One pattern. Every setup. The 2nd leg close is the entry — every time.
The M forms at the HOD after a bearish stop hunt. The W forms at the LOD after a bullish stop hunt. Both are institutional in origin — the second leg is a final test of the extreme before the reversal fires.
The entry sequence has seven steps. Every step matters. The most important: wait for the Leg 2 M15 candle to fully close before entering. Not before. Not during. On the close.
Stop loss goes 7 pip beyond the Leg 1 extreme — not Leg 2. Place it immediately on entry, before anything else.
Five validation criteria: Leg 2 must not exceed Leg 1, 30 min to 3 hours between legs, forming at the HOD/LOD, clear directional close on Leg 2, confirmed stop hunt preceding it. All five required.
Leg 2 breaking Leg 1 by just a few pips is the most common false signal. When it happens — step back, let the stop hunt extend, and look for the new Leg 2 at the new level.
Four variations — Railroad Tracks, Half Batman, Deep Retracement, Triple Leg — all follow the same underlying logic. The close of the final reversal candle is always the entry.

Next lesson:

CF-3.5 — Stop Loss Placement and the Two Stop Rules

THE M AND W FORMATION: YOUR ENTRY SIGNAL

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