2026 trading strategy: the ultimate reversal setup
welcome back to another edition of stay sharp.
with the year winding down, I've been reflecting on what's actually been working — and what I want to focus on going into 2026.
and after everything I’ve looked at, it keeps coming back to one setup:
the ultimate reversal setup.
I've covered this before in previous editions, but the ICT midnight open retracement specifically has been performing really well lately… so I wanted to do a refresher on the entire setup, show you the updated stats, and make sure you're ready to track this daily going into the new year.
here's what we're going to cover:
- quick refresher on the 3 reports that make up the ultimate reversal setup
- why the ICT midnight open retracement is crushing it right now
- how to enter, set stops, and take profits using the by spike subreport
- how to set up your dashboard to track this every single day
- a real example from November 20th, 2025
let's get into it.
step 1: quick refresher on the ultimate reversal setup
if you've been reading stay sharp for a while, you've seen me talk about this before — but it's worth repeating.
the ultimate reversal setup combines 3 different reports into one high-probability trade. here's what you're looking for:
- outside day — price opens outside of yesterday's range (above yesterday's high or below yesterday's low)
- gap — price opens above or below yesterday's close
- ICT midnight open retracement — price opens above or below the 12AM ET opening price
when all 3 of these reports align, you don't have just one telling you to expect a reversal — you have three.
that's the power of combining reports. instead of trading off a single 65% probability, you're stacking confluence… and that's when you can trade with real confidence.
here's the main idea:
when price opens outside of yesterday's range, it's far more likely to reverse back than to continue. same with gaps. same with the midnight open. I’ll show you the updated data for each in a second — but that’s why when all 3 align you get the ultimate reversal setup.
step 2: why the ICT midnight open retracement is performing so well right now
let's talk about why I'm bringing this up again now.
the ICT midnight open retracement report has been putting up strong numbers lately — and I want to make sure you're paying attention to it.
here's what the data is showing on NQ over the last 6 months (06/26/25 - 12/24/25):
ICT midnight open retracement:
- when price opens above the midnight open, it retraces back down 74% of the time
- when price opens below the midnight open, it retraces back up 62% of the time
that 74% number on the short side is really strong.
outside days:
- bullish outside day (opens above yesterday's high) reverses back down 69% of the time
- bearish outside day (opens below yesterday's low) reverses back up 71% of the time
gap fill:
- gaps up fill 57% of the time
- gaps down fill 60% of the time
now — you'll notice the gap fill numbers are a bit lower than the other two reports. that's fine. the gap fill is the weakest of the three, but when it aligns with the other two, it gives you an additional profit target.
the real edge here is the ICT midnight open and outside days reports both showing 69-74% probabilities. when those two align, you're already in a high-probability setup.
step 3: how to trade the ultimate reversal setup
so you've identified that all 3 conditions are aligned… now what?
this is where the by spike subreport comes in.
the by spike report measures the average continuation against your position before the reversal happens. in other words — how much heat should you expect to take if you enter at the open?
here's how to use it:
for entries:
you have two options —
- enter at the open and set your stop wide enough to account for the average spike
- wait for the average spike to play out, then enter on confirmation
waiting for the spike is more conservative. you'll miss some trades that reverse instantly, but you'll also avoid getting stopped out on the ones that push further before reversing.
for stops:
place your stop just beyond the high (or low) of the spike. if price keeps going past that level, your reversal thesis is probably wrong — and you want to be out.
for targets:
this is the best part — you have multiple data-backed levels to take profits:
- yesterday's high or low (from the outside days report)
- the ICT midnight open level
- yesterday's close (from the gap fill report)
you can scale out at each level, locking in profits as the trade works in your direction.
step 4: setting up your dashboard for 2026
if you want to track this setup every day, here's how to set it up:
on what's in play:
add the following reports to your what's in play dashboard:
- outside days
- gap fill
- ICT opening retracement
this way, you can see at a glance whether the conditions are aligned before the NY session even starts.
how to plot the ultimate reversal setup on TradingView:
just recently — we came out with the ultimate reversal setup indicator in TradingView. it’ll plot all 3 of the levels I’ve talked about above, and you can customize the colors/labels of each level.
here’s what it's called inside our indicator library:
you can get access to all of these by inputting your TradingView username into the TV icon on the right side of your edgeful dashboard.
your daily routine to start trading the ultimate reversal setup:
before the NY session opens, check:
- are we opening outside yesterday's range?
- is there a gap?
- where are we relative to the midnight open?
if all 3 are aligned — you have your ultimate reversal setup. check the stats, measure the expected spike, and plan your trade.
that's it. simple, repeatable, data-backed.
step 5: real example from November 20th, 2025
the setup:
- NQ opened as a bullish outside day — price opened above the prior day’s high
- there was a gap up — price opened above the prior day’s close
- price opened above the ICT midnight open level
all 3 reports aligned for a short reversal trade, hitting all 3 targets.
wrapping up
look — you don't need 10 different strategies going into 2026.
you need one that you understand, one that you trust, and one that's backed by data.
the ultimate reversal setup checks all of those boxes.
3 reports. multiple profit targets. a clear process for entries and exits.
if you take one thing from this edition, it's this: set up your dashboard to track this setup daily. the opportunities are there — you just need to be ready when they show up.
here are the links to the original stay sharp editions if you want to go deeper:
→ stay sharp 23: the ultimate reversal strategy
→ stay sharp 24: ultimate reversal setup follow-up
and if you’re ready to start trading the ultimate reversal setup on your tickers, it’s time to upgrade to edgeful.
