How to Trade a Bearish CLS Model 1 Setup on EURUSD

A Practical Guide to the CLS Strategy

Many aspiring traders struggle with finding a consistent, repeatable process. The CLS strategy is designed to solve that problem by providing a clear, step-by-step framework for analyzing the market. Using my recent analysis of a bearish Model 1 setup on EURUSD, let's walk through how you would approach trading this structure from start to finish.

This guide is perfect for anyone enrolled in a trading course or seeking to refine their execution skills. Following a structured plan is essential for any trader, especially a funded trader responsible for managing significant capital.

Step 1: Identify the High-Timeframe CLS Range

Your first task is to zoom out. As noted in the analysis, the setup begins with a "New CLS Range" being created on the monthly chart.

• Action: Look at a high timeframe (like daily or monthly) for a clear consolidation and subsequent expansion that defines a new trading range.
• Purpose: This range provides the macro view. It tells you the overall environment you are trading in and helps you establish a directional bias. For this EURUSD setup, the bias is bearish, looking for shorts within the newly defined range.

Step 2: Anticipate and Observe the Manipulation

With the range defined, you don't trade the middle. Instead, you wait for price to test the boundaries. The setup calls for watching for "manipulation in to the Key Level, below the CLS range."

• Action: Identify a key level of interest (e.g., an old high/low, an order block) near the edge of your range. Patiently wait for price to push into this level.
• Purpose: This phase is designed to trap traders who are chasing breakouts. Your job is not to participate, but to observe. A sharp rejection or reaction from this key level is the first sign that the manipulation may be complete.

Step 3: Wait for Confirmation via a CIOD

This is the most critical step and where discipline is paramount. After the reaction, you need a "CIOD (change in order flow)" to confirm that the market is ready to reverse.

• Action: A CIOD is a clear break of market structure on a lower timeframe. For a bearish setup, after price manipulates a high, you would look for a strong break below a recent swing low. This signals that sellers have taken control.
• Purpose: The CIOD is your evidence. It validates your thesis that the move into the key level was manipulation, not a true breakout. As a forex mentor, I teach that entering before a CIOD is one of the most common and costly mistakes.

Step 4: Execute and Manage the Trade

Once all the above conditions are met, you can plan your execution.

1. Entry: The rule is to "enter only after candle close." Wait for the candle that creates the CIOD to close. This confirms the break and reduces the chance of being caught by a false move.
2. Stop Loss: The idea explicitly states, "Always place a proper stop loss." Your stop loss should be placed in a logical location, typically above the high created during the manipulation phase. This defines your risk before you even enter.
3. Target: The initial target is the "50% of the CLS range." This is a predefined, logical level to take partial or full profits. It removes the guesswork and emotion from deciding when to exit.

By following these steps, you transform trading from a random activity into a disciplined, professional process. To see the full context, you can review the original chart here. Mastering this requires practice, and it's a core focus for anyone looking to learn forex trading effectively.