The 6 Basic FX Entry Patterns | Trend-Following, Counter-Trend, Buying the Pullback, Selling the Rally, Breakouts, and the Art of Waiting for the Return Move

Open any chart and the price always seems to be saying, “get in now or you’ll miss it.” You watch the candles climb higher and higher, buy at the market on impulse, and the moment you do, you’ve bought the top. The first wall beginners run into usually has less to do with the method itself than with simply not being able to wait.

This page organizes the basic patterns for FX entries into six types. But the focus isn’t so much on “where to enter” as on “why you should wait that long.” Trend-following, counter-trend, buying the pullback, selling the rally, breakouts, and the return move after a breakout — every one of these is a tool for avoiding a chase entry (buying the top or selling the bottom) and waiting until the evidence lines up. Building on the market structure covered in the basics of Dow Theory, we’ll now turn “where to enter afterward” into concrete patterns. Our focus keyword here is “FX entry pattern pullback” — we’ll look at buying the pullback and selling the rally as the centerpiece of the skill of waiting.

Why This Matters — “Why Wait So Long” Matters More Than “Where to Enter”

The real purpose of learning entry patterns isn’t to find some guaranteed winning spot. Even when you’re betting on the same direction, whether you jump in on thin evidence or wait until the evidence lines up completely changes how deep the wound is when the trade goes wrong. A pattern is a “commitment to wait” — a brake that stops your hand from hitting the market-order button out of pure emotion.

Let’s look at a concrete example. Say USD/JPY rallies 80 pips in one move, from 150.00 to 150.80. If you see that momentum and think, “this is an uptrend, I’ll buy with the trend,” then chase the price at 150.80, a pullback to just 150.20 already puts you 60 pips underwater. On the other hand, if you wait for the rally to pause and for a “pullback” (a temporary dip) down to around 150.30 before buying, you can ride the same uptrend while placing your risk starting point (stop-loss) much closer to your entry. A mere 50-pip difference in entry price completely changes your risk-reward ratio (covered in detail in stop-losses and money management).

In other words, “waiting” isn’t cowardice — it’s an act of designing your risk. When you chase a price, the distance from your entry to your stop-loss is wide from the moment you get in, and you’re also prone to buying the top. The longer you wait, the more likely price is to come back to a level that favors you. The point of learning these patterns is to build the discipline to wait for that favorable level.

Trend-Following and Counter-Trend (Riding the Trend vs. Fighting It)

Entry patterns split broadly into two categories: trend-following and counter-trend. Trend-following means entering in the same direction as the current flow (the trend) — buying in an uptrend, selling in a downtrend. Counter-trend means entering against the flow, betting that a reversal is coming soon — selling while price is rising, buying while it’s falling.

Trend-following is what beginners should try first. The reason is simple: the trend acts as a “flow that’s on your side,” pushing you along. As we covered in Dow Theory, an uptrend is defined as a state where both the highs and the lows are rising. As long as that flow continues, there’s room for price to come back your way even if your timing is a little off.

Counter-trend trading aims at the “end” of a trend or an “overextended reversal.” If you’re right, you get in close to the turning point (the top or bottom), which makes it efficient — but if the trend is still running, you’ll keep moving against it and your losses will keep growing. That’s why it’s called “catching a falling knife.” Counter-trend trading becomes valid not simply because price “went up too much,” but when price reaches a clear wall — support or resistance — and price action (a pin bar or engulfing candle) signals a reversal is starting. A counter-trend trade based on nothing more than a feeling of “this has gone too far” is just as dangerous as chasing the price.

Trend-Following vs. Counter-Trend at a Glance

Aspect	Trend-Following	Counter-Trend
Entry direction	Same as the trend	Against the trend
What’s on your side	The flow (trend continuation)	The bounce (rejection at a wall)
Strength	Room to be wrong and still recover; beginner-friendly	Close to the turning point; efficient
Weakness	Entry tends to lag	Losses grow if the trend continues
Evidence needed	A clear trend plus a pullback/rally	A strong wall plus reversal price action

Buying the Pullback and Selling the Rally (The Classic Trend-Following Approach)

Within trend-following, the first two techniques beginners should master are buying the pullback and selling the rally. These two — also the heart of our focus keyword — are the most straightforward answer to the dilemma of “I want to ride the trend, but I want to avoid chasing the price.”

Buying the pullback means waiting for a temporary dip — a “pullback” — partway through an uptrend, and buying there. An uptrend doesn’t move in a straight line; it rises, dips a little, then rises again, advancing like a staircase. If you buy at that slight dip, you can ride the move back up toward the recent high at a favorable price. Selling the rally is the mirror image: you wait for a temporary rise — a “rally” — partway through a downtrend, and sell there.

Let’s look at a numerical example. Suppose USD/JPY rises from 148.00 to 150.00, then pulls back to 149.30. As long as the uptrend (rising highs and lows) hasn’t broken down, this area around 149.30 becomes a candidate for buying the pullback. You’d place your stop-loss just outside the recent low — say, below 149.00 — with a profit target at the previous high of 150.00 or beyond. Entering at 149.30 gives you roughly 30 pips of risk against 70-plus pips of potential reward — a setup where the reward outweighs the risk. If you had instead chased the price up near the 150.00 high, you never would have gotten this favorable setup.

So how far should you wait for the “pullback” to go? A commonly used benchmark is a retracement of around half (50%) of the preceding move. For a rise from 148.00 to 150.00, half of that — around 149.00 — becomes one such benchmark. If a support line or trendline overlaps with that level, the evidence doubles or triples up, making it worth waiting for. Our own lab template also builds a “50%-plus retracement” into its market-reading conditions (see the lab’s discretionary trading template).

Breakout Entries and the Return Move After a Breakout

While buying the pullback and selling the rally target the “middle of a trend,” breakout entries target “the moment a wall gets broken through.” When price closes clearly above a resistance line that has long capped the upside, or above the top of a range (a sideways market), you buy on the view that a new advance is starting. It’s an appealing pattern because you can ride the momentum — but it’s also the pattern most likely to tempt you into chasing the price.

The problem is the “fakeout” (false breakout). Price can appear to break above a line only to snap right back below it. From an SMC perspective, this is explained as a “liquidity sweep” — a deliberate poke at the orders stacked on a line to hunt them out (see the SMC beginner’s roadmap and support/resistance and fakeouts). Chasing the price at the moment of the breakout is exactly when you’re most likely to get caught in one of these fakeouts.

This is where the pattern of waiting for the “return move after a breakout” comes in. After price breaks above a line, it pulls back to that line once more; this time the line functions as support and price rises again. You buy only after confirming this “came back and got supported” behavior. This phenomenon, where a broken line flips its role, is called a support/resistance flip, or role reversal (see the support/resistance flip).

Preventing a Chase Entry — Waiting for Confirmation

When it comes to handling breakouts, there are three “waiting conditions” that dramatically cut down the damage for beginners who follow them.

• Wait for the close to confirm. A brief wick poking past the line doesn’t count as a breakout yet. Wait for that candle to close and confirm its body finished outside the line. Checking on a higher timeframe makes this even more reliable.
• Wait for the return move. Rather than chasing the momentum right after the break, wait for price to come back to the broken line and get supported there. Placing your stop-loss just below that broken line lets you design a smaller risk.
• Pass on markets that don’t come back. A strong breakout can sometimes run without ever pulling back. In that case, don’t chase it — chasing after it and jumping in is exactly what a chase entry looks like. Waiting for the next opportunity is a perfectly legitimate decision too.

This posture of “waiting for confirmation” is exactly the key that turns breakouts — the most dangerous pattern of all — into a manageable one. Before entering, wait not for the moment of the break itself, but for the moment you can confirm the break was real. That alone drastically cuts down how often you get stopped out by fakeouts.

Using This in Discretionary Trading — How to Bundle Patterns 3 Through 6 Into One Piece of Evidence

We’ve now covered all six patterns, but in actual discretionary trading, you rarely use a pattern in isolation. A strong entry is a spot where multiple pieces of evidence overlap at the same point. Creating that “overlap” is exactly what the knowledge from each page you’ve studied so far is for.

For example, when considering a pullback buy in an uptrend, the evidence you’d bundle together looks like this. First, confirm with Dow Theory that you have “an uptrend with rising highs and lows” (evidence of direction). Next, check whether a support line or trendline sits at the spot the pullback reached (evidence of location). Then confirm whether price action — a reversal signal like a pin bar or engulfing candle — has appeared at that spot (evidence of timing). Only once direction, location, and timing all line up do you actually execute the pullback-buy pattern.

Put the other way around, if the direction looks good but the location is only so-so, or the location looks good but no reversal signal has shown up, then you “wait” or “pass.” Learning a pattern and waiting until the conditions for using it line up are a package deal. A chase entry can be redefined as taking action when only one or two of these three pieces of evidence are actually in place.

Useful for Evaluating EAs (Automated Trading) — How EAs “Can’t Wait” and How They “Do Wait”

The “skill of waiting” covered here doubles directly as a foundation for understanding how EAs (automated trading systems) work. At bottom, an EA’s entry conditions are simply a program judging, in place of a human, “what conditions have to line up before placing an order.” A human thinking “I’ll wait for a pullback, and buy once a pin bar shows up” and an EA judging “buy once price returns to the moving average and the most recent bullish candle exceeds a certain size” are, conceptually, the exact same thing: setting conditions for waiting.

That said, EAs have both a weakness and a strength that humans don’t. The weakness is that they “can’t wait flexibly.” Because their conditions are fixed as numbers, they’re poor at picking up on market context — for instance, judging to pass because a major economic release is imminent. The strength, on the other hand, is that they “never chase the price out of emotion.” Even in situations where a human can’t resist hitting the market-order button, an EA simply keeps waiting, unmoved, until its conditions are met. This trait of “being able to wait because it’s a machine” structurally shuts out chase entries — the single biggest enemy of discretionary trading.

That said, some caution is needed here too. Martingale-style EAs that have no built-in “design for waiting” and simply keep adding to a losing position as it moves against them may not actually be waiting at all — they may just be postponing the stop-loss. Our own MAC v2.0 (a GOLD-only EA built on SMC, using a 1.2x martingale scaled up to 15 steps, 30-pip spacing, a 15-pip take-profit, and no hard stop-loss under EA management) shares this structure, which is exactly why we publish its maximum floating loss and number of martingale additions as part of its track record. You can sharpen your eye for telling whether an EA’s conditions are “genuinely waiting” or “just postponing the cut” by reading what is an EA and how to spot a dangerous EA. You can also check exactly which timeframe and conditions an EA is watching in the MAC v2.0 specification sheet.

Applying This to AI Analysis — What It Looks Like When AI Decides to Pass on an Entry

Trying to reproduce the “skill of waiting” with AI reveals an interesting quirk. What’s hard for AI isn’t the “decision to enter” — it’s putting the “decision not to enter” into words. In our lab’s morning market analysis, we have the AI read charts across multiple timeframes and check whether the conditions for a pullback buy or a rally sell are actually in place. As a result, on days when the conditions are only half-met, it sometimes issues a decision to pass on the entry, saying something like: “Direction is up today, but the pullback is still shallow and no reversal signal has appeared, so we’re passing.”

Being able to put the reason for passing into words is the decisive difference from rote memorization. When a human chases the price and loses, they often can’t explain afterward why they got in. An AI can leave a record of exactly which piece of evidence — direction, location, or timing — was missing. Publishing not just the winning days but also the days it passed and the days it lost — that’s our lab’s stance as a verification-focused media outlet. Of course, AI isn’t infallible either; depending on how its conditions are set, it can pass too often or chase the price too. That’s exactly why we disclose those decisions as a track record on the performance dashboard and verify them, losses included.

Discretionary ↔ SMC ↔ EA Terminology Cross-Reference

Lining up the patterns covered so far across three columns — general discretionary-trading terms, SMC terms, and how EAs (automated trading) handle them — shows that they’re all just different names for the same phenomenon. Keeping this mapping in mind will save you from getting lost when reading an SMC primer or an EA’s specification sheet.

Entry Patterns — Discretionary / SMC / EA Cross-Reference

General Discretionary Term	SMC Term	How an EA (Automated Trading) Handles It
Pullback/rally (a favorable entry point)	Discount/premium zone	A retracement condition such as “once price returns to the moving average or a zone”
Fakeout (false breakout)	Liquidity sweep	A filter condition that excludes reversal moves right after a breakout
Return move after a breakout	Retest of an OB/FVG	Wait logic that places an order once price breaks out and then returns to a specified level
Reversal signal (pin bar, engulfing candle)	Price action plus liquidity reaction	A numerical judgment based on candle body-to-wick ratio
Avoiding a chase entry (buying the top)	Avoiding buying in the premium zone	Waiting for conditions to be met instead of using a market order

Summary

FX entries come down to six basic patterns: trend-following, counter-trend, buying the pullback, selling the rally, breakouts, and the return move after a breakout. But what really matters is less which pattern you pick and more “why you should wait that long.” A chase entry (buying the top) is a state of taking action before the evidence for direction, location, and timing has actually lined up. A pattern is a brake that makes you wait until all three are in place.

Beginners should start with the trend-following pattern of buying the pullback and selling the rally. Enter at the pullback in an uptrend, or the rally in a downtrend, at a level roughly halfway back through the preceding move, waiting for support/resistance and price-action evidence to overlap there. Breakouts are the pattern most likely to tempt a chase entry, so wait for the close to confirm and for the return move, and don’t chase a market that doesn’t come back. Holding onto this “condition for waiting” — as your own rule in discretionary trading, as an order condition in an EA, and as a pass decision in AI — is the common thread running through trading that survives. Also make it a habit to always decide in advance where you’ll cut your losses before you enter (see stop-losses and money management). Next, move on to the skill of deciding your stop-loss and position size before entering, and check the bigger picture in Dow Theory and the discretionary trading learning roadmap.

Frequently Asked Questions

• Q. How far should I wait for a pullback?
  A. There’s no single correct answer, but a retracement of around half (50%) of the preceding move is one benchmark. If a support line or trendline overlaps with that level, the case for waiting gets even stronger. Rather than chasing a shallow pullback, waiting until the evidence lines up tends to work in your favor because it lets you place your stop-loss closer to your entry.
• Q. Should I start with trend-following or counter-trend trading?
  A. We recommend beginners start with trend-following (buying the pullback and selling the rally). The trend acts as a flow on your side, leaving room for price to come back even if your timing is a little off. It’s safer to consider counter-trend trading only once you’re more experienced, and only when clear evidence — strong support/resistance plus reversal price action — actually lines up.
• Q. I keep chasing breakouts and getting caught in fakeouts. What should I do?
  A. The solution is to wait not for the moment of the break itself, but for the moment you can confirm the break was real. Concretely, wait for the close to confirm outside the line, then confirm that price has come back to the broken line and gotten supported there (the return move) before entering. It’s also important to pass on markets that run without ever coming back, rather than chasing them.