al-brooks-course
48F - Trading the Open
Raw transcript and slide notes for 48F - Trading the Open.
Overview
- Slides: 15
- Transcript segments: 428
- Status: 自动按 slide 时间线归档；核心概念和长期笔记可以在每个 slide 的
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Transcript 001
Time: 00:02
Bilingual Transcript
00:02 - 00:03
EN: This is Al Brooks.
00:03 - 00:05
EN: Thank you for watching the Brooks Trading Course.
00:05 - 00:09
EN: This is the sixth of six videos on trading the open.
Slide 001
Time: 00:11
Bilingual Transcript
00:13 - 00:15
EN: I’m going to begin by talking about
00:15 - 00:18
EN: what can happen after gap openings up or down.
00:18 - 00:23
EN: When I say a gap, I mean a gap above or below the final bar of yesterday,
00:23 - 00:26
EN: not necessarily a gap above yesterday’s high or low.
00:27 - 00:31
EN: Then next I want to talk about some common flag type patterns,
00:31 - 00:34
EN: bull flags and bear flags that develop in the first hour.
Slide 002
Time: 00:36
Bilingual Transcript
00:41 - 00:44
EN: Gaps are targets, and gaps can mean different things.
00:44 - 00:49
EN: For example, a gap can be above yesterday’s high, or it can be simply
00:49 - 00:52
EN: above the final bar of yesterday or yesterday’s close, like this.
00:53 - 00:57
EN: Or here, it’s very hard to see, but there’s a little gap up
00:57 - 01:00
EN: on the open today compared to yesterday’s close.
01:00 - 01:02
EN: A small gap above the final bar of yesterday.
01:03 - 01:05
EN: Gaps are magnets.
01:08 - 01:13
EN: For example, here, the open of today is above yesterday’s high,
01:13 - 01:16
EN: so there’s a gap from today’s open to yesterday’s high.
01:20 - 01:23
EN: Then the market pulled back a little bit on the open,
01:25 - 01:29
EN: and then there’s a gap from the low of today to yesterday’s high.
01:33 - 01:37
EN: Also, if there’s a gap between today’s open and today’s low
01:37 - 01:41
EN: and the high of any prior day, that is also a gap and a magnet,
01:41 - 01:43
EN: and the bears will try to close it.
01:45 - 01:50
EN: There’s a gap from this close from yesterday and today’s open and today’s low.
01:50 - 01:51
EN: It’s also a magnet.
01:51 - 01:54
EN: The bears will try to get a selloff down not only
01:54 - 01:57
EN: below yesterday’s high, but down to the next gap
01:57 - 02:00
EN: - the high of that final bar, or the close of yesterday.
02:06 - 02:10
EN: Here we gapped up on the open, so today’s open is a gap
02:10 - 02:12
EN: above the high of the final bar of yesterday
02:12 - 02:16
EN: and above yesterday’s close, but not above yesterday’s high.
02:20 - 02:24
EN: We pulled back on the open, so the opening low now has a gap
02:24 - 02:27
EN: above the final bar of yesterday and yesterday’s close,
02:27 - 02:31
EN: and we sold off strongly here but reversed up again.
02:31 - 02:35
EN: After this reversal, we can see there’s a gap below the low of the day
02:35 - 02:38
EN: and the high of that final bar and yesterday’s close.
02:39 - 02:41
EN: These are magnets below.
02:41 - 02:43
EN: The market got drawn down to the magnet,
02:43 - 02:47
EN: but was unable to close the gap because the bulls were too strong.
02:51 - 02:54
EN: Very hard to see the gap open today.
02:54 - 02:56
EN: The low of the first bar is above the high
02:56 - 03:00
EN: of the final bar of yesterday, and that created a gap.
Slide 003
Time: 03:05
Bilingual Transcript
03:08 - 03:13
EN: Whenever there’s a gap up, it’s a breakout, and as you know,
03:13 - 03:16
EN: breakouts on the open have a 50% chance of reversing.
03:17 - 03:20
EN: Here we have a gap up and we got a bull trend.
03:20 - 03:22
EN: Here we have a gap up, and we got a bear trend.
03:22 - 03:25
EN: In general the bigger the gap up, the more likely there’s going
03:25 - 03:28
EN: to be a trend day, and the bigger the gap up,
03:28 - 03:32
EN: if there’s going to be a trend day, more likely it’ll be a bull trend day.
03:32 - 03:34
EN: But basically it’s 50/50 on the open.
03:34 - 03:40
EN: 50/50 chance the breakout will succeed, 50/50 chance it’ll fail.
03:45 - 03:48
EN: You can’t spend a lot of time looking at the gap,
03:48 - 03:51
EN: and then looking at the news and trying to analyze
03:51 - 03:54
EN: whether the news is really bullish, and you’re going to get a trend up.
03:55 - 03:56
EN: You can’t do that.
03:56 - 03:57
EN: It’d just be stupid.
03:57 - 03:59
EN: If it’s a gap up and you’ve got a bunch of bear bars,
03:59 - 04:01
EN: you’ve got to sell betting that we’re going to reverse down.
04:02 - 04:04
EN: If it’s a gap up and you’ve got a bunch of bull bars,
04:04 - 04:07
EN: you look to buy betting that you’re going to get a trend up.
04:07 - 04:11
EN: A lot of times when there’s a gap, the market simply goes sideways.
04:11 - 04:14
EN: I would say half the time it goes sideways,
04:14 - 04:18
EN: 25% of the time you get a bear trend, 25% of the time you get a bull trend.
04:19 - 04:23
EN: When it’s sideways, it begins either as a bull or bear trend and then reverses.
04:24 - 04:26
EN: For example, here you got a bull trend
04:26 - 04:27
EN: and then a bear trend, and then a bull trend.
04:27 - 04:31
EN: It just keeps reversing, and that’s by definition a Trading Range day.
04:36 - 04:37
EN: We have a big gap up.
04:37 - 04:41
EN: The bears tried to sell off, could not get below the low of the open,
04:41 - 04:43
EN: and then we reversed up strongly.
04:43 - 04:47
EN: For me, this is a bull trend and a Double Bottom bull flag
04:47 - 04:51
EN: near the Moving Average, and a reasonable buy either by the close
04:51 - 04:55
EN: of this bull bar, or the close of the second bar, which is also a bull bar.
04:55 - 04:56
EN: Follow-through bar.
04:57 - 04:59
EN: You could buy above the bear bar, but most traders
04:59 - 05:02
EN: do not like to buy above bear bars with stops.
05:10 - 05:13
EN: We have a big gap up, a bear bar on the first bar.
05:13 - 05:16
EN: We went above the first bar and then down again,
05:16 - 05:19
EN: so now we have consecutive bear bars on the open,
05:19 - 05:21
EN: one of them with a pretty big bear body.
05:21 - 05:22
EN: It’s a Micro Double Top.
05:22 - 05:25
EN: We went down, we went up, and then we’re down again.
05:25 - 05:28
EN: It’s a reasonable sell hoping for a high of the day,
05:28 - 05:31
EN: and it turned out the bears got a huge bear trend day.
05:36 - 05:37
EN: Micro Double Top.
05:37 - 05:39
EN: We gapped up, we sold off on the first bar.
05:39 - 05:43
EN: We went above the first bar on the second bar and reversed down.
05:43 - 05:44
EN: Micro Double Top.
05:44 - 05:45
EN: The second bar did not have to go
05:45 - 05:47
EN: above the first for it to be a Micro Double Top.
05:47 - 05:49
EN: It just had to go up and then down.
05:55 - 05:57
EN: We have a gap up and a bull trend.
05:57 - 05:58
EN: No, we have a reversal.
05:58 - 05:59
EN: We have a bear trend.
05:59 - 06:01
EN: No, we have a Double Bottom and now we have a bull trend.
06:02 - 06:04
EN: This is a Trading Range day after a big gap up.
06:09 - 06:12
EN: At the time of the gap up, you don’t know it’s going to be a Trading Range day.
06:12 - 06:15
EN: You just know you have a big bull bar, and you have a bull follow-through bar,
06:15 - 06:19
EN: and therefore it’s a reasonable buy taking a chance that we get a bull trend.
06:25 - 06:29
EN: Now it’s reversing down and it’s reversing down from a Micro Double Top.
06:29 - 06:32
EN: It’s a possible failed breakout above yesterday’s high,
06:32 - 06:35
EN: and it’s a reasonable short betting the bull trend
06:35 - 06:37
EN: will reverse into a bear trend.
06:37 - 06:41
EN: After 4 consecutive bull bars like this, I would not take that short.
06:41 - 06:44
EN: I would wait for a bigger Double Top before shorting.
06:44 - 06:47
EN: Probably there are buyers below, and the bulls will try it again
06:48 - 06:50
EN: - which they did here, from a Higher Low.
06:50 - 06:54
EN: So if you get out here below the Micro Double Top, you could buy again here,
06:54 - 06:57
EN: and then you have a Double Top bear flag or a Triangle.
06:57 - 06:59
EN: Bears will sell here for a failed breakout.
06:59 - 07:02
EN: If they take the sell, now we have a Double Bottom
07:02 - 07:04
EN: at the Moving Average with a good bull bar.
07:04 - 07:05
EN: You buy again.
07:05 - 07:07
EN: Typical Trading Range open.
07:08 - 07:10
EN: You’re repeatedly reversing.
07:14 - 07:15
EN: Gap down.
07:15 - 07:16
EN: Same logic applies.
Slide 004
Time: 07:15
Bilingual Transcript
07:16 - 07:19
EN: A gap down is a breakout.
07:19 - 07:21
EN: On the open, 50% of breakouts reverse.
07:22 - 07:24
EN: You can get a gap down in a bear trend day,
07:24 - 07:26
EN: you can get a gap down in a bull trend day.
07:35 - 07:40
EN: Today, this gap was below the entire prior day
07:40 - 07:42
EN: On the daily chart, this would be a gap down.
07:42 - 07:45
EN: This would be the high of the day, the top of the gap,
07:45 - 07:48
EN: and the bottom of the gap would be yesterday’s low.
07:51 - 07:53
EN: The close of the day yesterday.
07:55 - 07:57
EN: The low of the closing range.
07:57 - 08:01
EN: So there’s a gap from yesterday’s low, there’s a gap from yesterday’s close,
08:01 - 08:04
EN: there’s a gap from the low of the closing range.
08:04 - 08:08
EN: Those are all gaps, and all of them are magnets if the market reverses.
08:09 - 08:10
EN: Low of the day.
08:15 - 08:19
EN: As soon as today opens, traders see the gap below yesterday’s low,
08:19 - 08:22
EN: but there are also gaps below yesterday’s close
08:22 - 08:26
EN: and gaps below the final bar of the closing range.
08:31 - 08:34
EN: Here’s the high of the opening range, and now there’s a gap
08:34 - 08:38
EN: from the high of the opening range to yesterday’s low,
08:38 - 08:43
EN: to yesterday’s close, and to the low of the final bars of the closing range.
08:45 - 08:46
EN: Then the high of the day.
08:46 - 08:50
EN: Now we have a gap between the high of the day and all of those magnets above.
08:57 - 09:01
EN: Here we have a gap down, but not below yesterday’s low, which is way down here.
09:02 - 09:05
EN: The gap down is simply below the final bar of yesterday
09:05 - 09:07
EN: and below yesterday’s close.
09:11 - 09:14
EN: Gap down, we got a trend from the open bear trend.
09:19 - 09:21
EN: This gap is difficult to see.
09:21 - 09:25
EN: This is yesterday, and then today opened a little bit
09:25 - 09:28
EN: below yesterday, but within yesterday’s range.
09:28 - 09:29
EN: It’s still a gap.
09:34 - 09:37
EN: We have several days with gaps down.
Slide 005
Time: 09:35
Bilingual Transcript
09:37 - 09:38
EN: A gap down.
09:38 - 09:42
EN: 50% chance any breakout is going to reverse on the open,
09:42 - 09:46
EN: so a gap down has a 50% chance of leading to a bear trend,
09:46 - 09:49
EN: 50% chance you’ll get a gap down and reverse.
09:49 - 09:52
EN: A lot of times the market just goes sideways, so it tries to reverse
09:52 - 09:55
EN: and then reverses back down and goes sideways.
09:55 - 09:58
EN: So we’ve got two reversals or more, and then a Trading Range.
10:03 - 10:07
EN: When you have a very big gap like this, the odds are higher
10:07 - 10:10
EN: that you’re going to get a trend day, and if you do get a trend day,
10:10 - 10:14
EN: the odds are higher that it’ll be a bear trend instead of a bull trend.
10:14 - 10:16
EN: Not much higher, but a little bit higher.
10:16 - 10:19
EN: Here, it turned into a bull trend for the first several hours.
10:24 - 10:27
EN: Big gap down and then a big bear bar, and you say,
10:27 - 10:29
EN: “Oh my gosh, there’s terrible news out there.
10:29 - 10:33
EN: The market has to go down.” No, you trade what you see.
10:33 - 10:36
EN: You see a big gap down and you see a reversal and you see 2 big bull bars
10:36 - 10:41
EN: - it doesn’t matter that the big gap down means there’s some bearish news.
10:41 - 10:43
EN: The market’s telling you the market believes
10:43 - 10:45
EN: the market is cheap and it’s going higher.
10:45 - 10:48
EN: So don’t think too much about what the news is,
10:48 - 10:51
EN: and don’t think too much that the big gap is bearish.
10:51 - 10:54
EN: The market’s going up, you have to buy.
10:59 - 11:00
EN: Here we have a gap down.
11:00 - 11:02
EN: We tried to reverse up.
11:02 - 11:04
EN: The reversal failed and we have a Micro Double Top,
11:04 - 11:06
EN: and we got a trend from the open bear trend.
11:10 - 11:13
EN: Traders will sell the neckline of the Micro Double Top,
11:13 - 11:16
EN: which is below the low of the second bar.
11:16 - 11:21
EN: We went down on the first bar, up on the second, and now we’re going down again.
11:25 - 11:28
EN: We have a big gap down and a big bear bar,
11:28 - 11:32
EN: but then an immediate reversal up, so a 2 bar reversal.
11:32 - 11:35
EN: Bulls will buy above the high of that bull bar or they’ll buy a close here
11:35 - 11:37
EN: or they’ll buy above the Higher Low here.
11:40 - 11:44
EN: It became a Buy The Close bull trend for the first half of the day.
11:51 - 11:55
EN: Once you have the reversal up to a new high, most traders would raise their stop
11:55 - 11:59
EN: from below the low of the day, to below the low of this pullback bar.
12:04 - 12:08
EN: Big gap down, reversed up, and now it has a Double Bottom reversing up.
12:08 - 12:10
EN: However, now it has a Double Top
12:10 - 12:13
EN: and you have to assume it’s going to reverse down.
12:13 - 12:16
EN: This is a Trading Range open, where you typically
12:16 - 12:18
EN: get both a Double Bottom and a Double Top.
12:19 - 12:22
EN: A lot of times you end up buying here, you’re buying again there,
12:22 - 12:25
EN: you’re selling there, you’re selling again here.
12:25 - 12:27
EN: Very often you’ll have to take multiple entries
12:27 - 12:31
EN: before you get one that leads to a swing trade.
12:42 - 12:45
EN: Double Top bear flag, a Double Top just below the Moving Average.
12:45 - 12:47
EN: Bear bar closing on its low.
12:47 - 12:50
EN: Reasonable sell looking for a swing down.
12:55 - 12:59
EN: We have a failed bear breakout and then a failed bull breakout twice,
12:59 - 13:02
EN: and the day became a Trading Range day.
Slide 006
Time: 13:05
Bilingual Transcript
13:12 - 13:16
EN: What do you notice here? We gap up above yesterday’s close.
13:16 - 13:18
EN: We don’t know if it’s above yesterday’s high
13:18 - 13:20
EN: because we cannot see the bars to the left,
13:20 - 13:22
EN: but we’re gapping up below the final bar of yesterday
13:22 - 13:25
EN: and above yesterday’s close, and above the Moving Average.
13:25 - 13:28
EN: First bar, not a bear body, and then we have a pretty good bull bar,
13:28 - 13:30
EN: and then another bull bar, and another bull bar.
13:31 - 13:35
EN: When you see a day that has a lot of big bull bars early on,
13:35 - 13:39
EN: you know one thing: the odds are it’s not going to be a bear trend day.
13:39 - 13:43
EN: It’s either going to be a Trading Range day or a bull trend day,
13:43 - 13:46
EN: and therefore it’s good to start to buy early.
13:48 - 13:52
EN: We have an attempt to reverse with this bear bar, so it’s a pullback.
13:52 - 13:55
EN: You can buy above the high of the bar, or you can simply buy closes,
13:55 - 13:57
EN: or you could buy with a stop above any pullback
13:57 - 14:01
EN: - here, here, here, or second entry here.
14:08 - 14:12
EN: It looks like a weak rally because you have a big bull bar and then a doji.
14:12 - 14:14
EN: Couple bull bars and another doji.
14:14 - 14:17
EN: So you’re getting bad follow-through, but you’re getting gaps.
14:17 - 14:20
EN: The market tried to reverse here, but it went back up,
14:20 - 14:24
EN: and the low of this bar is above the high of that bar, so there’s a gap.
14:24 - 14:26
EN: And then here it tried to reverse,
14:26 - 14:29
EN: and this low fell just a little bit above that high.
14:29 - 14:32
EN: So there’s a little bit of overlap, a negative (body) gap.
14:32 - 14:33
EN: Same here.
14:33 - 14:35
EN: A gap or a negative (body) gap.
14:35 - 14:38
EN: When you see a rally where you have good bull bars
14:38 - 14:41
EN: with bad follow-through, you think bull leg in a Trading Range.
14:41 - 14:44
EN: However, if you also see gaps and negative gaps,
14:44 - 14:48
EN: that’s a sign of very strong bulls, and the market is probably going higher,
14:48 - 14:51
EN: and it’s probably a Small Pullback Bull Trend.
14:55 - 14:57
EN: Tight Trading Range, middle of the day.
14:57 - 14:58
EN: Possible Final Flag.
14:59 - 15:02
EN: We got a final breakout and then a bear bar.
15:02 - 15:05
EN: Traders will exit, betting this is the final bull flag,
15:05 - 15:08
EN: and we might get profit-taking into the end of the day.
15:08 - 15:09
EN: Or they’ll wait for 2 or 3 bear bars,
15:09 - 15:12
EN: and then exit on the close of those bear bars.
Slide 007
Time: 15:20
Bilingual Transcript
15:26 - 15:29
EN: Big gap up, and a good bull bar.
15:29 - 15:31
EN: Good follow-through bar.
15:31 - 15:35
EN: Reasonable to go long, but then a bear bar closing near its low.
15:36 - 15:38
EN: Better to get out of longs there.
15:38 - 15:40
EN: Traders will look to sell, betting that we’ll probably get down
15:40 - 15:44
EN: near the Moving Average, and this may be the high of the day.
15:44 - 15:46
EN: You can sell below the bear bar, or you can wait
15:46 - 15:49
EN: for 3 or 4 bear bars and then sell closes.
15:49 - 15:52
EN: Or you can sell with a limit order above the high of the prior bar,
15:52 - 15:54
EN: especially if it’s a bear bar.
15:55 - 15:59
EN: Whenever you see 3, 4, 5 pretty good bear bars early in the day,
15:59 - 16:02
EN: the odds are today is not going to be a bull trend day.
16:02 - 16:06
EN: It’ll either be a Trading Range day or a bear trend.
16:06 - 16:11
EN: It was a bear trend for the first 15 bars or so, and then it reversed up.
16:11 - 16:14
EN: Whenever you have a big selloff like this, about the size
16:14 - 16:17
EN: of an average day’s range, and you get a reversal,
16:17 - 16:21
EN: usually the market has a hard time getting much above the high of the day,
16:21 - 16:24
EN: and it usually closes somewhere off the high,
16:24 - 16:26
EN: and around the high of the opening range.
16:26 - 16:29
EN: This ended up as a big doji bar on the daily chart.
16:29 - 16:32
EN: It opened here and it closed a little bit above.
16:32 - 16:34
EN: This is a big Trading Range day.
16:34 - 16:35
EN: It’s a reversal day.
16:35 - 16:37
EN: It had a big swing down and a big swing up.
16:38 - 16:40
EN: But it closed somewhere around the middle,
16:40 - 16:43
EN: and it’s actually just a big Trading Range day,
16:43 - 16:47
EN: and these early bear bars made a big bull trend unlikely.
16:47 - 16:51
EN: We got a big bull swing, but we could not get much above the high of the day,
16:51 - 16:54
EN: the early high of the day, and we could not close much above it either.
17:01 - 17:05
EN: Consecutive bull bars on the open, and then 3 bear bars
17:05 - 17:07
EN: going below the low of the first bar.
17:07 - 17:09
EN: Room to the Moving Average.
17:09 - 17:11
EN: Probably going at least a little bit lower,
17:11 - 17:12
EN: and this might be the high of the day.
17:12 - 17:14
EN: Reasonable to sell the close.
17:20 - 17:22
EN: The bulls tried to get a Wedge reversal up here.
17:22 - 17:25
EN: Very Tight Channel, a lot of big bear bars.
17:25 - 17:28
EN: Traders are not going to take that first buy.
17:29 - 17:31
EN: Then we had a big bear breakout here.
17:31 - 17:33
EN: You’d expect a second leg down, and we got it.
17:33 - 17:36
EN: Then we reversed up from just below yesterday’s low.
17:36 - 17:41
EN: This is a consecutive Parabolic Wedge pattern, a consecutive complex bottom.
17:41 - 17:45
EN: We tried to form a Wedge bull flag here, bull breakout,
17:45 - 17:48
EN: pullback to the Moving Average, decent buy signal bar.
17:48 - 17:51
EN: So Wedge bull flag, 50% pullback from this.
17:51 - 17:56
EN: It failed, and then we got another breakout, and another Parabolic Wedge.
17:56 - 17:58
EN: Reversal up, reversal up, reversal up.
17:58 - 18:00
EN: Very good bull bar.
18:00 - 18:03
EN: This is a good candidate for at least a couple legs up,
18:03 - 18:04
EN: maybe the low of the day.
18:05 - 18:09
EN: Traders will buy above its high, or they’ll buy a pullback
18:09 - 18:12
EN: above a good bull bar here, maybe above a bull bar here.
18:12 - 18:14
EN: This is a Triangle or a Wedge.
18:14 - 18:19
EN: Three legs down – one, pullback, two, pullback, and then three.
18:20 - 18:23
EN: Reasonable buy, stop below here, hoping for a swing up.
18:23 - 18:24
EN: A reversal day.
18:24 - 18:27
EN: Higher Low Major Trend Reversal.
Slide 008
Time: 18:30
Bilingual Transcript
18:36 - 18:37
EN: Gap down.
18:38 - 18:41
EN: Small bull bar with a tail on top, not very good for the bulls,
18:41 - 18:43
EN: and then a pair of pretty good bear bars.
18:43 - 18:47
EN: At this point we’re Always In Short, probably going at least a little bit lower.
18:47 - 18:52
EN: When you see 3, 4, 5 good size bear bars on the open,
18:52 - 18:55
EN: the odds are today is either going to be a bear trend day
18:55 - 18:59
EN: or a Trading Range day, not a bull trend day.
19:05 - 19:08
EN: Second consecutive good bear bar, new low of the day.
19:08 - 19:10
EN: Reasonable to sell the close, or sell with a limit order
19:10 - 19:12
EN: at the high of that bar.
19:19 - 19:22
EN: Sold off and then sideways.
19:22 - 19:24
EN: You can say Trading Range began here;
19:24 - 19:27
EN: I think the Trading Range began here or here.
19:27 - 19:29
EN: Selloff, Trading Range.
19:29 - 19:32
EN: The market then decides whether to get trend reversal up,
19:32 - 19:34
EN: or trend resumption down.
19:35 - 19:37
EN: Traders will look for reversals.
19:37 - 19:41
EN: They’ll look to buy near the bottom, and they’ll look to sell near the top.
Slide 009
Time: 19:45
Bilingual Transcript
19:45 - 19:48
EN: Big gap down, but then bull trend.
19:54 - 19:57
EN: Bull bar closing near its high, and then another bull bar.
19:57 - 20:00
EN: Market’s probably Always In Long and going higher,
20:00 - 20:03
EN: and then you got a third or fourth, fifth bull bar.
20:03 - 20:07
EN: Somewhere in here the odds were that today would not be a bear trend day.
20:07 - 20:10
EN: It’d either be a bull trend day (which it was)
20:10 - 20:13
EN: or it would simply go sideways in a Trading Range.
20:19 - 20:22
EN: Traders would buy the close of the first or second bar,
20:22 - 20:25
EN: or they’ll start buying above the high of the first bar,
20:25 - 20:28
EN: or above the high of the second bar, looking for the market
20:28 - 20:30
EN: to close the gap below yesterday’s low.
20:30 - 20:33
EN: Maybe get up to the Moving Average, maybe get up to yesterday’s close.
20:33 - 20:35
EN: By the third or fourth bar,
20:35 - 20:38
EN: it was likely that this was going to be a bull trend.
20:46 - 20:49
EN: Strong rally and then a Trading Range for many hours.
20:50 - 20:55
EN: A BreakOut Mode setup for either trend resumption up tomorrow,
20:55 - 20:56
EN: or trend reversal down tomorrow.
21:05 - 21:09
EN: This is a failed breakout below yesterday’s low with a decent buy signal bar.
21:09 - 21:13
EN: It’s a reasonable buy, and then we got a trend from the open bull trend.
21:18 - 21:22
EN: The market often forms bull flags or bear flags on the open.
Slide 010
Time: 21:20
Bilingual Transcript
21:22 - 21:24
EN: Double Bottoms, Wedges.
21:24 - 21:26
EN: I want to talk a little bit about that.
Slide 011
Time: 21:27
Bilingual Transcript
21:30 - 21:34
EN: Here we have a big gap up and a rally, and then a selloff
21:34 - 21:38
EN: with 8 bear bars in here – yet we have a bull bar at the Moving Average.
21:38 - 21:40
EN: This is bearish.
21:40 - 21:42
EN: The bears own a lot of bears here.
21:42 - 21:45
EN: However, it’s a big gap up, and this pullback
21:45 - 21:48
EN: is about a 50% pullback of this rally.
21:48 - 21:51
EN: It’s a test of the Moving Average, and it’s a Double Bottom
21:51 - 21:54
EN: with this low, and we have a good buy signal bar.
21:54 - 21:56
EN: It’s reasonable to buy above its high.
21:56 - 21:58
EN: We tried to break to the upside here; we pulled back.
21:58 - 22:01
EN: Reasonable to buy above this high, looking for a new high
22:01 - 22:04
EN: of the day and maybe a Measured Move up.
22:11 - 22:13
EN: I call this a Double Bottom bull flag.
22:13 - 22:15
EN: Gap up.
22:15 - 22:18
EN: We rallied here, so this is the low of the day (a bottom),
22:18 - 22:21
EN: and then we tested that low, and formed a Double Bottom.
22:24 - 22:27
EN: This is a small Double Bottom bull flag,
Slide 012
Time: 22:25
Bilingual Transcript
22:27 - 22:29
EN: but I would also call this a Wedge Bottom.
22:29 - 22:33
EN: We rallied here, failed, rallied again, failed,
22:34 - 22:36
EN: and now we have a third reversal attempt
22:36 - 22:39
EN: near the Moving Average with a good-looking bull bar.
22:39 - 22:40
EN: That’s a reasonable buy.
22:40 - 22:43
EN: We have a bull trend, including the gap up,
22:43 - 22:47
EN: and a pullback into a Wedge bull flag just above the Moving Average.
22:56 - 22:58
EN: Sometimes it’s easier to see the Wedge
22:58 - 23:01
EN: if you simply connect the low of the first bar and the third bar,
23:01 - 23:05
EN: even if the second bar goes below the low of the line.
23:05 - 23:06
EN: That’s okay.
23:14 - 23:17
EN: If you buy on a stop above the high of that good-looking bull bar,
23:17 - 23:19
EN: you put your protective stop just below.
23:26 - 23:29
EN: When there is a very strong rally on the open like this,
23:29 - 23:33
EN: it’s common for the market to go sideways for hours.
23:33 - 23:35
EN: Sometimes you’ll get trend resumption up
23:35 - 23:37
EN: or trend reversal down later in the day.
23:37 - 23:39
EN: Also, we have an early Trading Range here,
23:39 - 23:43
EN: and then a brief breakout – 3, 4, or 5 bars.
23:43 - 23:45
EN: That often leads to a trending Trading Range day
23:45 - 23:49
EN: where you have a lower range, a brief breakout, and then an upper range.
23:49 - 23:53
EN: You trade this like a Trading Range – buy low, sell high, and scalp.
Slide 013
Time: 23:55
Bilingual Transcript
23:56 - 23:59
EN: We have a small gap down, and then we rallied.
23:59 - 24:02
EN: We paused, and we rallied again.
24:06 - 24:08
EN: Right below the Moving Average.
24:08 - 24:10
EN: For the bears this is a Double Top.
24:10 - 24:12
EN: We have the high of the day here.
24:12 - 24:13
EN: We sold off.
24:13 - 24:15
EN: We’re testing that high and we’re selling off again.
24:16 - 24:18
EN: You can call it a Wedge if you want.
24:18 - 24:22
EN: You can call it a failed breakout above a Double Top with here and here.
24:22 - 24:25
EN: I would simply call this a Double Top bear flag.
24:25 - 24:28
EN: So we are selling off, we have a gap down,
24:28 - 24:31
EN: we have a high of the day here and a second high here.
24:31 - 24:35
EN: You can sell either below the bull bar, or some traders prefer to sell
24:35 - 24:39
EN: below bear bars – so maybe below here – hoping for a swing down.
24:39 - 24:41
EN: Possible high of the day.
24:47 - 24:50
EN: In general, higher probability to sell below bear bars,
24:50 - 24:54
EN: and if you sell a follow-through bar after a bear breakout,
24:54 - 24:57
EN: so the Sell The Close of that bear bar.
Slide 014
Time: 25:00
Bilingual Transcript
25:00 - 25:04
EN: Gapped down and then we rallied, but here’s the high of the day.
25:04 - 25:07
EN: We went up to a new high and we went to another new high.
25:07 - 25:09
EN: Therefore, this is a type of Wedge.
25:10 - 25:12
EN: It’s a pullback from the selloff.
25:12 - 25:15
EN: It’s about a 50% pullback of this selloff.
25:15 - 25:18
EN: It’s a test of the Moving Average, and it has a bear sell signal bar.
25:18 - 25:22
EN: This is a Wedge bear flag after a gap down.
25:22 - 25:26
EN: So bear trend and then a Wedge rally – one, two, three
25:26 - 25:30
EN: - and then a bear sell signal bar, all below the Moving Average.
25:30 - 25:32
EN: Reasonable sell for a swing down.
25:44 - 25:46
EN: I began by talking about gap openings.
Slide 015
Time: 25:45
Bilingual Transcript
25:46 - 25:48
EN: Gap can be anything.
25:48 - 25:51
EN: They could be a gap completely above or below yesterday’s high or low,
25:52 - 25:56
EN: or they could simply be a gap above or below the final bar of yesterday.
25:57 - 26:00
EN: It’s important to think of a gap as a breakout,
26:00 - 26:04
EN: and a breakout on the open has about a 50% chance of reversing.
26:04 - 26:08
EN: If there’s a big gap, there’s a slightly higher probability
26:08 - 26:10
EN: that there’ll be a trend in the direction of the gap.
26:10 - 26:12
EN: So if you have a huge gap down, slightly more likely
26:12 - 26:14
EN: if there’s going to be a trend, it’ll be down.
26:14 - 26:17
EN: If there’s a huge gap up, slightly more likely
26:17 - 26:19
EN: if there’s going to be a trend that it would be up.
26:20 - 26:24
EN: On the open, the market often enters a Trading Range,
26:24 - 26:26
EN: and that Trading Range can become a flag.
26:27 - 26:30
EN: For example, if you have a gap down and you have a rally up
26:30 - 26:32
EN: to the high of the day near the Moving Average,
26:32 - 26:36
EN: you can have a Double Top bear flag for a possible high of the day.
26:36 - 26:39
EN: If you get a couple legs up, it could be a Wedge bear flag
26:39 - 26:40
EN: and possible high of the day.
26:40 - 26:44
EN: If you get a gap up and a rally initially, and then a pullback
26:44 - 26:46
EN: to around the low of the day and the Moving Average,
26:46 - 26:49
EN: and about a 50% pullback of the entire move,
26:49 - 26:51
EN: that could be a Double Bottom bull flag.
26:51 - 26:54
EN: If you have a gap up and a rally and then a couple legs down
26:54 - 26:59
EN: near the Moving Average, 50% pullback, that could be a Wedge bull flag,
26:59 - 27:01
EN: and the start of a bull trend day.
27:05 - 27:06
EN: I’m Al Brooks.
27:06 - 27:08
EN: Thank you for watching the Brooks Trading Course.
27:08 - 27:12
EN: This is the sixth of six videos on trading the open.