al-brooks-course
49A - Swing Trading Examples
Raw transcript and slide notes for 49A - Swing Trading Examples.
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Transcript 001
Time: 00:02
Bilingual Transcript
00:02 - 00:03
EN: This is Al Brooks.
00:03 - 00:06
EN: Thank you for watching the Brooks Trading Course.
00:06 - 00:11
EN: In this video I’m going to be giving some examples of swing trading.
Slide 001
Time: 00:14
Bilingual Transcript
00:15 - 00:20
EN: I will specifically give day trading examples for swing traders.
Slide 002
Time: 00:22
Bilingual Transcript
00:25 - 00:30
EN: An important observation is that on the open,
00:30 - 00:35
EN: 50% of the opens have a breakout that fails and reverses.
00:35 - 00:40
EN: For example, on this particular slide you can see that the market sold off
00:40 - 00:44
EN: strongly on the open and then reversed up, trapping the bears.
00:44 - 00:49
EN: That’s an opening reversal, and that selloff reverses up usually
00:49 - 00:54
EN: at some kind of support – although you cannot see the bars
00:54 - 00:55
EN: to the left to see the support.
00:57 - 01:02
EN: When you get the reversal up – here we have an outside up bar, a good size bar,
01:02 - 01:05
EN: and then we have a second good size bar, very little overlap,
01:05 - 01:10
EN: closing on the high – this close is far above the high of that bar.
01:10 - 01:13
EN: This close not only is above the high of this bar and above the Moving Average,
01:13 - 01:17
EN: it’s also above the high of this final bear leg.
01:17 - 01:22
EN: So at that point there is probably a 70% chance
01:22 - 01:24
EN: of at least some kind of a Measured Move up.
01:24 - 01:29
EN: The first thing I always look at when you get an initial breakout like this
01:29 - 01:33
EN: with big bull trend bars is I look for a Measured Move
01:33 - 01:37
EN: based upon the open of the first bar to the close of the final bar.
01:37 - 01:40
EN: So at this point, here’s the final bar.
01:40 - 01:42
EN: At this point the final bar is here.
01:42 - 01:44
EN: At this point the final bar is here, and then here.
01:45 - 01:46
EN: All the way up.
01:46 - 01:48
EN: I keep increasing my Measured Move.
01:48 - 01:52
EN: The chart is at this point and I don’t see all of those other bars.
01:52 - 01:56
EN: I’m looking for a Measured Move projection based upon this open to that close,
01:56 - 01:58
EN: which projects up here.
01:59 - 02:03
EN: By the time this bar appears and closes, I would move this line to here,
02:03 - 02:06
EN: and this line would then get moved further up.
02:08 - 02:13
EN: But in any case, I think the market clearly became Always In Long at this point,
02:13 - 02:17
EN: and at that moment there was a 70% chance that we would get
02:17 - 02:22
EN: at least a Measured Move up based upon the size of the breakout
02:22 - 02:24
EN: - either the low of the bar to the high of this bar,
02:24 - 02:27
EN: the open of this bar to the close of that bar.
02:31 - 02:36
EN: A lot of bulls will therefore buy the close of this bar.
02:36 - 02:42
EN: So as soon as that bar closes, they either place a limit order to buy
02:42 - 02:46
EN: at the price that the bar closed – sometimes you do not get filled
02:47 - 02:51
EN: - and the other alternative is to simply hit “Buy the Market.”
02:51 - 02:54
EN: So as soon as this bar closes, you click “Buy the Market.”
02:54 - 02:56
EN: You get filled pretty close to the open.
03:00 - 03:04
EN: Also, as the market’s going up, if you did not buy the close here,
03:04 - 03:07
EN: you simply can buy at the market at any point
03:07 - 03:11
EN: because you know there’s a 70% chance of the market going at least to this point.
03:11 - 03:18
EN: As the breakout increases in size, the size of the target is further up.
03:26 - 03:31
EN: Let’s say you did not buy this close, and then the market goes up to this bar.
03:31 - 03:35
EN: You know this is a logical entry price,
03:35 - 03:37
EN: so some traders are looking for reasons to buy.
03:37 - 03:40
EN: They could buy the market – this blue rectangle
03:40 - 03:44
EN: - or they can simply place a limit order to buy a 50% pullback.
03:44 - 03:48
EN: So at the close of this bar, they can place a limit order to buy a 50% pullback
03:48 - 03:51
EN: from the original entry price to that close.
03:51 - 03:56
EN: If they were lucky, they’d get filled with that pink box right there.
03:58 - 04:01
EN: So now we have at this point 3 strong bars.
Slide 003
Time: 04:00
Bilingual Transcript
04:01 - 04:04
EN: We ended up with 4, 5 strong bars,
04:04 - 04:09
EN: and at some point this breakout phase of the trend is followed by a pullback.
04:09 - 04:11
EN: A little pullback here, a bigger pullback here.
04:12 - 04:16
EN: Typically what happens after the pullback is either the market
04:16 - 04:20
EN: enters a Trading Range and then decides between trend reversal down
04:20 - 04:27
EN: and trend resumption up, or the pullback leads to a channel, as was the case here.
04:30 - 04:32
EN: Here’s the pullback.
04:34 - 04:38
EN: You can argue that it was a Trading Range as well to this point,
04:38 - 04:42
EN: and then we got a good buy signal bar and trend resumption up.
04:42 - 04:45
EN: But to me, this is a bear channel, a bull flag,
04:45 - 04:48
EN: three pushes down – one, two, three.
04:48 - 04:53
EN: Does not matter that the trend continued higher after the first pullback.
04:53 - 04:58
EN: These 2 bars are part of the pullback that began with this reversal down,
04:58 - 05:02
EN: so to me this is a Wedge bull flag and this was the end of the pullback
05:02 - 05:04
EN: and this was the start of a channel.
05:07 - 05:11
EN: Eventually when you have a bull channel, you think of it as a bear flag.
05:11 - 05:14
EN: 75% chance you’re going to get a bear breakout
05:14 - 05:18
EN: and usually an evolution into a Trading Range.
05:21 - 05:23
EN: Did the Trading Range begin here?
05:23 - 05:26
EN: You certainly have Trading Range bars starting right there.
05:26 - 05:29
EN: Three dojis, four dojis, five dojis.
05:29 - 05:32
EN: Out of the 10 bars here, they’re almost all dojis.
05:32 - 05:36
EN: We continued higher, but the Trading Range might in fact have begun here,
05:36 - 05:39
EN: and you can see we reversed down strongly
05:39 - 05:42
EN: and tested the bottom of that developing Trading Range.
05:42 - 05:44
EN: When I start to see a series of dojis like this,
05:44 - 05:49
EN: I wonder if the channel is beginning to evolve into a Trading Range.
05:50 - 05:53
EN: Again, a very strong bull breakout like this,
05:54 - 05:58
EN: probably 90% chance you’re going at least a little bit higher.
05:58 - 06:01
EN: 70% chance you’ll probably go high enough up for a Measured Move
06:01 - 06:09
EN: based upon the open or low to the close of the final bar of the breakout phase.
06:15 - 06:19
EN: The 10% of the time when this breakout leads to the high of the day
06:19 - 06:24
EN: and a reversal down, it’s usually a fairly clear Parabolic Wedge Top,
06:24 - 06:25
EN: and this is not.
06:25 - 06:29
EN: You can argue first push up and then pullback
06:29 - 06:32
EN: and then second push up and pullback, third push up.
06:33 - 06:36
EN: This is not how Parabolic Wedges typically look.
06:37 - 06:41
EN: Normally the first push begins after the low,
06:41 - 06:46
EN: and usually you have at least 1 or 2 bear bars along the way.
06:47 - 06:50
EN: Although this could be a Parabolic Wedge Top
06:50 - 06:53
EN: and the high of the day, maybe only a 10% chance
06:53 - 06:55
EN: it’s going to lead to a major reversal.
06:55 - 06:58
EN: 90% chance it leads to a pullback and then at least
06:58 - 07:01
EN: either a Trading Range or continued trend.
07:05 - 07:08
EN: The first push began during the bear leg.
07:08 - 07:10
EN: Not typical for Parabolic Wedge Tops.
07:10 - 07:13
EN: You can call this the first push, then pullback,
07:13 - 07:16
EN: and then second push, pullback, and third push.
07:16 - 07:23
EN: But again, no bear bars along the way, and if there’s no clear argument
07:23 - 07:27
EN: for a Wedge here, it’s probably not a Parabolic Wedge Top,
07:27 - 07:31
EN: and therefore the probability that this is a major reversal
07:31 - 07:33
EN: and the high of the day is only about 10%.
07:37 - 07:42
EN: When you do get a swing trade on the open or in the first hour or so,
07:42 - 07:47
EN: it typically lasts for 2 to 3 hours, but it can be as short as 30 minutes.
07:47 - 07:50
EN: We could just go up for 5 or 6 bars and then reverse down.
07:50 - 07:55
EN: Or it can be as long as 4 hours or even last all day.
07:59 - 08:02
EN: Once you start to evolve into a Trading Range,
08:02 - 08:06
EN: you can get a late reversal down instead of trend resumption up.
08:06 - 08:08
EN: I talked about that earlier.
08:08 - 08:12
EN: Bull breakout and then a channel, and then it evolves into a Trading Range,
08:12 - 08:16
EN: and the Trading Range has about a 50% chance
08:16 - 08:19
EN: of trend resumption up versus trend reversal down.
08:19 - 08:23
EN: I talk about this more in the videos on Trading Ranges.
Slide 004
Time: 08:25
Bilingual Transcript
08:27 - 08:30
EN: Here’s another chart with a very strong reversal up,
08:30 - 08:34
EN: and we have a Micro Double Top and a pullback,
08:34 - 08:39
EN: a Wedge pullback – one or one and then two and then three.
08:42 - 08:45
EN: This is a Buy The Close finish from yesterday,
08:45 - 08:49
EN: and we tried to get follow-through buying here.
08:49 - 08:51
EN: We tried here and it sold off.
08:51 - 08:55
EN: Then we tried again a second time from a Micro Double Bottom and sold off again.
08:58 - 09:02
EN: Then we ended up with a pretty strong reversal down.
09:03 - 09:05
EN: So Micro Double Top, reversal down.
09:05 - 09:09
EN: But when it follows a very Tight Bull Channel like this with no bear bars
09:09 - 09:13
EN: on the way up, it’s probably only going to be a minor reversal,
09:13 - 09:17
EN: which means a bear leg in what will become a Trading Range.
09:19 - 09:22
EN: Take a look at how strongly down this is reversing, closing on the low.
09:22 - 09:25
EN: A second big bear bar closing on its low.
09:25 - 09:29
EN: During the open of the day like this, if I see 2 big bear bars
09:29 - 09:34
EN: closing on their lows, not much overlap, I conclude the market is Always In Short
09:34 - 09:38
EN: and that we’ll go down for some kind of Measured Move.
09:38 - 09:42
EN: Even though I think there’ll be buyers around a 50% pullback
09:42 - 09:45
EN: from this strong bull trend and I think this is going to end up
09:45 - 09:49
EN: as a bear leg in what will become a Trading Range, at this point,
09:49 - 09:53
EN: 2 consecutive strong bear bars, I think we’re going down further.
09:53 - 09:58
EN: Then here we have 5 consecutive bear bars all closing below their midpoints.
09:58 - 10:02
EN: That means a high probability that after the first pullback,
10:02 - 10:04
EN: we’ll get at least a little bit more down.
10:06 - 10:09
EN: High probability there are sellers above the high of the prior bar.
10:09 - 10:13
EN: Bears will sell with a limit order at the high of that bar,
10:13 - 10:15
EN: and they get filled here.
10:15 - 10:17
EN: Even though it’s a strong bull trend bar,
10:17 - 10:21
EN: chances are after 5 strong bear bars on the open,
10:21 - 10:23
EN: we’re going down at least a little bit further.
10:25 - 10:28
EN: So we have a Micro Double Top, up and down.
10:28 - 10:33
EN: Tried to go up again and turned down, and then a pair of big bear bars.
10:33 - 10:37
EN: You could sell the reversal down or you could sell any of these closes,
10:37 - 10:41
EN: or you could sell above that bear bar, arguing 5 consecutive bear bars
10:41 - 10:43
EN: closing below their midpoints on the open
10:43 - 10:45
EN: - probably at least a little bit more down.
10:47 - 10:48
EN: I’d describe this as a Wedge.
10:48 - 10:53
EN: First push down, either that low or this bear bar or that low.
10:53 - 10:54
EN: Doesn’t matter.
10:55 - 10:57
EN: We went up and down here, and then a second push
10:57 - 11:00
EN: and then a pullback and then a third push.
11:00 - 11:05
EN: So to me this is a Wedge bull flag and a 50% pullback from yesterday’s close.
11:07 - 11:08
EN: Also, take a look at here.
11:08 - 11:11
EN: You see the high of this bar and then the Moving Average?
11:12 - 11:12
EN: See right here?
11:12 - 11:13
EN: There’s a gap.
11:13 - 11:16
EN: There’s space between the high of this bar and the Moving Average.
11:16 - 11:19
EN: So that’s a Moving Average Gap bar.
11:20 - 11:24
EN: That often leads to the final leg of a bull trend
11:24 - 11:28
EN: before the market attempts a Major Trend Reversal
11:28 - 11:30
EN: - here, a Lower High Major Trend Reversal.
11:38 - 11:42
EN: As strong as this is, it’s still the first reversal down,
11:42 - 11:45
EN: so probably a minor reversal.
11:45 - 11:49
EN: At this point you have a Lower High Major Trend Reversal.
11:49 - 11:53
EN: Bull trend, pretty good breakout, a lot of bear bars, and then a Lower High.
11:53 - 11:58
EN: However, after 5 consecutive bull bars, usually that is not going to lead
11:58 - 12:03
EN: to a successful reversal, even though it is a Major Trend Reversal.
12:05 - 12:09
EN: We got a selloff, 5 bars down, and then we got another rally.
12:09 - 12:10
EN: So it looks like a Triangle.
12:10 - 12:16
EN: Three pushes up – one, two, three – and then we’re in BreakOut Mode
12:16 - 12:19
EN: and we have a smaller Triangle at the apex of a bigger Triangle.
12:21 - 12:24
EN: So we have a big move up, a big move down,
12:24 - 12:26
EN: another big move up, another big move down.
12:26 - 12:29
EN: Big up, big down, big confusion.
12:29 - 12:33
EN: Big confusion means traders do not believe the market’s going to go down very far.
12:33 - 12:36
EN: They also do not believe it’s going to go up very far,
12:36 - 12:42
EN: so they’re going to exit quickly, and that results in the formation
12:42 - 12:47
EN: of a Trading Range, and a Triangle is a type of a Trading Range.
12:47 - 12:51
EN: You might sell the Lower High Major Trend Reversal,
12:51 - 12:53
EN: but after 5 consecutive bull bars like this,
12:53 - 12:57
EN: chances are again it’s a minor reversal, just like that,
12:57 - 13:00
EN: and chances are this is going to be a minor reversal up
13:00 - 13:03
EN: because the bear channel is so tight.
13:03 - 13:06
EN: Usually you do not get a protracted bull trend
13:06 - 13:08
EN: after a very Tight Channel like that.
Slide 005
Time: 13:10
Bilingual Transcript
13:12 - 13:19
EN: In a Triangle, BreakOut Mode, 50% chance bear breakout, 50% chance bull breakout,
13:19 - 13:24
EN: 50% chance the first breakout up or down fails and reverses.
13:27 - 13:28
EN: We have the bear breakout.
13:28 - 13:35
EN: It’s a two-legged pullback from the high, so one and then Triangle and then two.
13:36 - 13:39
EN: Leg 1 and then a pullback and then 2.
13:39 - 13:42
EN: So this is a large High 2 buy setup,
13:42 - 13:46
EN: and it’s possibly a failed breakout below the Triangle.
13:46 - 13:51
EN: This is not a good-looking buy signal after 4 consecutive bear bars.
13:51 - 13:56
EN: Traders would rather buy above a bull bar, like above this bar or above that bar
13:56 - 14:00
EN: or above that bar, or if they want higher probability they wait
14:00 - 14:03
EN: for the breakout, a very big bull breakout bar.
14:03 - 14:05
EN: The bears tried to get a Low 2 short.
14:06 - 14:08
EN: First leg up, pullback, second leg up.
14:08 - 14:09
EN: Tried to reverse down.
14:09 - 14:14
EN: Instead we got a strong bull breakout above this Low 2 bear flag.
14:14 - 14:17
EN: At this point the bears are getting Lower Highs and Lower Lows,
14:17 - 14:21
EN: a bear channel, and here we got a strong bull breakout.
14:21 - 14:26
EN: A big bull bar closing far above the highs of the past 10 or 15 bars,
14:26 - 14:29
EN: and then the following bar has a bull body as well.
14:29 - 14:32
EN: That increases the probability of at least a second leg up.
14:35 - 14:39
EN: Leg 1 and then pullback into a Triangle and then Leg 2,
14:40 - 14:44
EN: and traders will start buying above bull bars, buying close,
14:44 - 14:47
EN: buying above this bull bar and then buying closes,
14:47 - 14:50
EN: and then a High 1 bull flag after a strong breakout.
14:50 - 14:52
EN: Probably at least a little bit more up.
14:53 - 14:55
EN: Now what about this Low 2 short?
14:56 - 14:57
EN: We’re in a bear channel.
14:57 - 15:03
EN: Lower Highs, Lower Low, a two-legged pullback, and technically it’s a short.
15:03 - 15:06
EN: But we have 4 consecutive bull bars here,
15:06 - 15:10
EN: 3 of them pretty good size bull bodies closing near their highs.
15:10 - 15:15
EN: Probably this is a minor reversal and the best the bears will get is sideways,
15:15 - 15:19
EN: and they might get a total failure and a bull breakout.
15:24 - 15:29
EN: We have a legitimate bear flag, and we got a bull breakout.
15:29 - 15:33
EN: Big bar like this, you’ve got to be thinking about possible Measured Move up
15:33 - 15:35
EN: - maybe from this low to that high.
15:40 - 15:44
EN: You can call this another Wedge – here, one, two, three
15:44 - 15:47
EN: - but whenever you have a strong breakout bar like this,
15:47 - 15:49
EN: we’re probably going to get a second leg up.
15:49 - 15:54
EN: To me this is an example of consecutive tops.
15:54 - 15:58
EN: So we tried to top here – one, pullback, two – and then we got a strong breakout.
15:58 - 16:00
EN: Probably a second leg up.
16:01 - 16:04
EN: Low 1, Low 2, so it’s a Low 4 sell setup.
16:04 - 16:08
EN: Low 1, Low 2, strong bull breakout, and then another complex top.
16:08 - 16:09
EN: Two attempts.
16:09 - 16:13
EN: Low 1, Low 2, so we’re probably going to fall for at least a couple legs.
Slide 006
Time: 16:15
Bilingual Transcript
16:17 - 16:21
EN: This is a fairly common pattern on the open, where you have a Parabolic Wedge Top.
16:22 - 16:25
EN: Yesterday we had bear channel, bull flag.
16:25 - 16:29
EN: Three pushes down – one, pullback, two, pullback,
16:29 - 16:33
EN: and then today, part three and a Wedge bull flag.
16:34 - 16:37
EN: Then we got a bull breakout and follow-through buying.
16:37 - 16:40
EN: A big bull bar, probably Always In Long.
16:40 - 16:43
EN: We’re trying to resume up after the bear channel.
16:43 - 16:46
EN: So Always In Long, traders buy that, they buy that.
16:46 - 16:48
EN: They buy another bull close here.
16:48 - 16:51
EN: They buy below the bear bar, betting the reversal will fail.
16:51 - 16:54
EN: They buy the High 1 buy on the resumption up.
16:54 - 16:56
EN: They buy the breakout of this pullback.
16:57 - 17:02
EN: However, whenever you see a strong rally – another Buy Climax,
17:02 - 17:10
EN: another Buy Climax – and a Leg 1, Leg 2 and a buy setup for Leg 3,
17:10 - 17:13
EN: you have to be thinking about the possibility of a Parabolic Wedge Top
17:13 - 17:15
EN: and an early high of the day.
17:17 - 17:20
EN: When you get that third push up and you see a particularly big bull bar
17:20 - 17:24
EN: closing on its high, you’ve got to be thinking that it might be an exhaustive end
17:24 - 17:29
EN: of a strong rally, and that rally might be a bull leg
17:29 - 17:31
EN: in what could become a Trading Range.
17:31 - 17:35
EN: It could also be the end of a rally that leads to a bear trend.
17:38 - 17:42
EN: Yesterday we had a bear channel, and today we tried to break below
17:42 - 17:45
EN: and we instead reversed up pretty strongly.
17:47 - 17:49
EN: You can also call this an Expanding Triangle.
17:49 - 17:53
EN: Three pushes down – one, two, three – and then three pushes up
17:53 - 17:58
EN: - either one or one, and then two and then three.
17:58 - 18:01
EN: But I think the market just went Always In Long here.
18:01 - 18:04
EN: So first reversal down, even though Expanding Triangle,
18:04 - 18:08
EN: that first reversal down probably will fail.
18:11 - 18:14
EN: So we have a failed top and a breakout,
18:14 - 18:18
EN: so you’ve got to be thinking after the breakout we might get a second leg up.
18:18 - 18:21
EN: So we had a top attempt in a bull breakout,
18:21 - 18:26
EN: and you typically get a second leg up when you have a top that fails.
18:27 - 18:31
EN: However, that leaves us with three consecutive Buy Climaxes
18:31 - 18:36
EN: - here, or you could say this one has two in it – one and then two
18:36 - 18:39
EN: - and then a smaller one here, and then a bull flag.
18:39 - 18:41
EN: You’ve got to be concerned that we might get a third one up
18:41 - 18:46
EN: and then a reversal down and an early high of the day.
18:49 - 18:53
EN: When I see this, I’m thinking this is more likely a bull leg in what will become
18:53 - 18:58
EN: a Trading Range or a possible high of the day and a reversal down.
18:58 - 19:01
EN: In any case, you have to be prepared to sell.
19:03 - 19:05
EN: You could sell below that bear bar.
19:05 - 19:10
EN: You can even sell above this bull bar, betting that it’s a Parabolic Wedge Top.
19:10 - 19:12
EN: Probably not going much higher.
19:12 - 19:15
EN: Higher probability to wait for a decent reversal down
19:15 - 19:18
EN: and follow-through bar or a breakout.
19:18 - 19:21
EN: Here we have an attempt at a bull flag, and we got a breakout
19:21 - 19:24
EN: and a follow-through bar, so this is a Sell The Close selloff.
19:24 - 19:26
EN: And then this is really important,
19:26 - 19:29
EN: a big bear breakout with a decent follow-through bar.
19:29 - 19:34
EN: This might end up being a Measuring Gap for a second leg down.
19:34 - 19:35
EN: So you can sell that close.
19:35 - 19:40
EN: Higher probability to sell here, or we got a Low 2 bear flag.
19:40 - 19:43
EN: Bull bar, first leg up, and then a bear bar, and then a second leg up.
19:43 - 19:47
EN: So this is a Low 2 sell, and then more Sell The Close selloff.
19:48 - 19:50
EN: Typically in a Parabolic Wedge opening reversal,
19:50 - 19:55
EN: when it starts to reverse it goes down in a fairly Tight Channel for 5 or 10 bars.
19:55 - 20:00
EN: If instead it goes 5 or 6 bars and then sideways or bounces a little bit,
20:00 - 20:05
EN: then it’s probably not going to be a Parabolic Wedge Top and a bear trend.
20:05 - 20:09
EN: But this is typical when you are going to get a bear trend.
20:09 - 20:15
EN: You get a reversal down and 5, 10 bars or more in a fairly Tight Channel.
20:15 - 20:17
EN: Then you start getting bear breakouts.
20:22 - 20:26
EN: Again, I think it’s Sell The Close in here, Sell The Close in here,
20:26 - 20:28
EN: and then clearly Sell The Close down there.
20:33 - 20:36
EN: Another example of a Parabolic Wedge Top.
Slide 007
Time: 20:35
Bilingual Transcript
20:36 - 20:38
EN: A big bull bar and then a bear bar.
20:38 - 20:43
EN: Big bull bar and a doji and then another 2 bar breakout.
20:43 - 20:47
EN: So it’s basically a spike for the first push up
20:47 - 20:49
EN: and then second push and third push.
20:49 - 20:53
EN: So you’ve got to be thinking this could be a Parabolic Wedge high of the day.
20:54 - 20:59
EN: Very tight Spike and Channel bull trend, so Spike and Channel,
20:59 - 21:01
EN: and then a decent sell signal bar.
21:01 - 21:04
EN: Not particularly high probability sell.
21:04 - 21:05
EN: More likely we’ll go sideways.
21:05 - 21:11
EN: But it’s a decent sell because the potential reward is much bigger than the risk.
21:15 - 21:18
EN: So you could sell there or you can wait for this and that.
21:18 - 21:23
EN: Waiting for these closes, higher probability of more down.
21:23 - 21:26
EN: But whenever you wait for higher probability,
21:26 - 21:30
EN: there’s usually less profit remaining and your stop is further away,
21:30 - 21:31
EN: so there’s greater risk.
21:32 - 21:33
EN: Either way is okay.
21:33 - 21:37
EN: Taking the early entry with lower probability and lower risk
21:37 - 21:41
EN: - in other words, lower probability, better risk/reward – or the later entry
21:41 - 21:47
EN: where you get higher probability but you pay for it with worse risk/reward.
21:48 - 21:51
EN: Look what happened at the new low of the day.
21:51 - 21:52
EN: Big reversal up.
21:52 - 21:55
EN: A lot of times when you have these Parabolic Wedge selloffs
21:55 - 21:58
EN: and you get to the low of the day, you do get a big reversal up.
21:58 - 22:02
EN: The market’s deciding whether it’s going to fall for a Measured Move
22:02 - 22:06
EN: based upon the height of the Buy Climax or instead either go sideways
22:06 - 22:09
EN: or bounce in a bull channel – which it did here.
22:13 - 22:16
EN: For the bulls it’s a Double Bottom and a buy.
22:16 - 22:18
EN: Very Tight Bear Channel.
22:18 - 22:24
EN: Most likely minor reversal and sideways for 5 or 10 bars, but it is an okay buy.
22:24 - 22:29
EN: Here, we have a bear breakout and a pullback, but we have a doji here,
22:29 - 22:33
EN: basically dojis here, and we know traders bought here
22:33 - 22:35
EN: and they bought here at the open.
22:35 - 22:37
EN: When the market opened, they bought and the market went up.
22:37 - 22:40
EN: So they’re probably going to buy again here.
22:41 - 22:43
EN: This bull bar is a pullback from this bear breakout,
22:43 - 22:47
EN: but we’re in a buy zone and it’s a bad looking sell signal bar,
22:47 - 22:51
EN: so probably bulls will place limit orders to buy the low of that bar.
22:51 - 22:53
EN: So that’s another chance to buy.
22:53 - 22:56
EN: Or you could buy with a stop above the high of the bar.
23:00 - 23:02
EN: Double Bottom pullback, so three pushes down.
23:03 - 23:05
EN: This little tail is one, two, three.
23:05 - 23:09
EN: This is really not a push down, but it’s still three lows
23:09 - 23:13
EN: - a low here, low there, low there, and to me
23:13 - 23:16
EN: that is a type of a Triangle BreakOut Mode situation.
23:18 - 23:23
EN: So we have a Double Bottom, a reversal up, and a pullback from the Double Bottom.
23:23 - 23:25
EN: Reasonable candidate for the low of the day.
23:26 - 23:31
EN: On the way up, we got a Low 1, and look at this rally.
23:31 - 23:34
EN: Where are the consecutive big bull trend bars?
23:34 - 23:38
EN: Consecutive bull bars, but no consecutive big bull trend bars.
23:38 - 23:39
EN: We got a bull bar, doji.
23:39 - 23:41
EN: Bull bar, tail, and then doji.
23:41 - 23:44
EN: 3 bull bars, shrinking bodies.
23:44 - 23:46
EN: So this looks like a bull leg in a Trading Range.
23:46 - 23:48
EN: So Low 1, possible Low 2.
23:48 - 23:51
EN: 50% pullback of the bear leg.
23:51 - 23:54
EN: You can also call it a Double Top bear flag, a Wedge bear flag.
23:55 - 23:59
EN: Wedge – one, two, three or one, two, three.
23:59 - 24:03
EN: However, in any case, this looks like we’re going sideways to down,
24:03 - 24:05
EN: so that would be another sell.
Slide 008
Time: 24:10
Bilingual Transcript
24:10 - 24:12
EN: Starting to resume up.
24:12 - 24:15
EN: Where are the consecutive big bear bars?
24:15 - 24:19
EN: We went bear bar, bull bar, bear bar, bull bar, bear bar, dojis.
24:20 - 24:22
EN: So this looks like a bear leg in a Trading Range.
24:22 - 24:26
EN: However, at this point – low, Higher Low, Higher Low
24:26 - 24:31
EN: - we may be in a bull channel and we may start to get Higher High,
24:31 - 24:36
EN: Higher High, Higher High, and Higher Low, Higher Low, Higher Low.
24:36 - 24:39
EN: This is a reasonable buy for a Double Bottom.
24:39 - 24:41
EN: Even though the bottoms are not at the same price,
24:41 - 24:45
EN: it’s a Double Bottom Higher Low and a weak selloff.
24:45 - 24:49
EN: Bulls will buy above the bull bar for the reversal up.
24:50 - 24:55
EN: Then up here, first push up or first push up, second push up, third push up,
24:55 - 24:58
EN: or first push and then bear bar, second push
24:58 - 25:00
EN: and then bear bar, and then third push.
25:00 - 25:02
EN: Slightly Higher High.
25:02 - 25:04
EN: This looks like Trading Range price action.
25:04 - 25:08
EN: So just like bears sold above this bar and made money,
25:08 - 25:12
EN: they’ll probably sell above this bar and make money, especially given
25:12 - 25:16
EN: that there are different ways to draw a Wedge bear flag.
25:16 - 25:20
EN: Then we got a bear bar closing on its low, so traders will sell below
25:20 - 25:22
EN: that low hoping for a swing down,
25:22 - 25:25
EN: knowing that more likely they’ll only get a scalp.
25:30 - 25:31
EN: Reversing up.
25:31 - 25:34
EN: I would not necessarily buy above the bear bar,
25:34 - 25:36
EN: but above the bull bar or the second bull bar.
25:36 - 25:38
EN: That would be a higher probability buy.
25:38 - 25:42
EN: Higher Low, Higher Low, Higher Low, Higher Low.
25:43 - 25:45
EN: High, Higher High, Higher High.
25:45 - 25:47
EN: Clearly in a bull channel,
25:47 - 25:51
EN: and some traders like to buy with limit orders below bars.
25:51 - 25:54
EN: Other traders buy as the market’s reversing up.
25:59 - 26:04
EN: Then here, first push up, second push up, third push up.
26:05 - 26:07
EN: We’re trying to break above the bull channel.
26:07 - 26:12
EN: Tried once, tried twice, and then bear bars, and a second entry short here.
26:12 - 26:16
EN: That’s a good location to exit longs
26:16 - 26:19
EN: or even to go short for a scalp down at the end of the day.
26:20 - 26:24
EN: A Wedge Lower High – one, two, three, so a Wedge.
26:24 - 26:27
EN: Lower High and a second entry sell.
26:27 - 26:30
EN: First reversal down, second reversal down.
26:36 - 26:40
EN: Now, Parabolic Wedges are not only up.
Slide 009
Time: 26:37
Bilingual Transcript
26:40 - 26:43
EN: They can also be down, and different ways to look at this.
26:43 - 26:45
EN: First leg down ended with this doji or that doji,
26:46 - 26:49
EN: and then a second leg down and a third leg down.
26:50 - 26:51
EN: 3 bar Sell Climax.
26:51 - 26:55
EN: Sell Climax, Sell Climax, Sell Climax.
26:55 - 27:01
EN: Whenever you get a series of three or four consecutive Sell Climaxes on the open,
27:01 - 27:04
EN: you have to be thinking about an opening reversal,
27:04 - 27:07
EN: a Parabolic Wedge selloff and then a reversal up.
27:09 - 27:10
EN: Now think about this.
27:10 - 27:14
EN: No matter where you sell in here, it’s clearly Sell The Close.
27:15 - 27:17
EN: If you’re selling here, your stop is way up here,
27:18 - 27:22
EN: and if you’re a bear, your stop is far away.
27:22 - 27:26
EN: You’re expecting a little bit more down, not necessarily a lot more down,
27:26 - 27:31
EN: and with your stop so far away you have to reduce your risk.
27:31 - 27:36
EN: The easiest way to do that is to buy back some of your shorts.
27:36 - 27:40
EN: After consecutive Sell Climaxes, you’re not expecting a lot more down.
27:40 - 27:44
EN: So you start to buy back your shorts, and that can cause a reversal.
27:44 - 27:48
EN: Because of the potential of this being a Parabolic Wedge Bottom on the open,
27:48 - 27:51
EN: it could end up being the low of the day.
27:54 - 27:56
EN: Maybe if you’re selling down here,
27:56 - 28:00
EN: you use a tighter stop at the top of a big Sell Climax here.
28:01 - 28:06
EN: But when you’ve got the biggest looking bear breakout
28:06 - 28:10
EN: and it’s occurring as the third Sell Climax in a trend,
28:10 - 28:14
EN: you have to be thinking that yeah, there might be one more leg down,
28:14 - 28:16
EN: but probably not two or three legs down.
28:17 - 28:20
EN: This is probably the next to the final leg in the bear trend.
28:20 - 28:23
EN: Then we have an ii bear flag here,
28:23 - 28:27
EN: so you’ve got to be thinking it’s the potential final bear flag.
28:27 - 28:31
EN: Yes, you can sell, but you have to be ready for a reversal up.
28:35 - 28:38
EN: If you’re ready for that and you see a pretty good-looking
28:38 - 28:40
EN: bull reversal bar like this, you can buy.
28:40 - 28:45
EN: First reversal up in a very Tight Bear Channel, probably minor.
28:45 - 28:49
EN: So it might go up 5 or 10 bars – here it might’ve gone up 15 bars
28:49 - 28:52
EN: - and then it probably will test back down
28:52 - 28:54
EN: and then try to form a Major Trend Reversal.
28:54 - 28:56
EN: Tried to form one here, failed.
28:56 - 28:58
EN: Got a second leg down.
28:58 - 29:00
EN: Tried again here, and it was successful.
29:02 - 29:06
EN: A pretty decent buy above that bull reversal bar
29:06 - 29:10
EN: after the Parabolic Wedge Bottom and a fairly tight stop.
29:11 - 29:12
EN: Another thing about this.
29:12 - 29:16
EN: The bears who sold anywhere up here or even down here,
29:16 - 29:18
EN: they were surprised by the size of this,
29:18 - 29:21
EN: and they’re going to be pretty eager to take profits.
29:21 - 29:26
EN: They see it as an unusual gift, a big gift.
29:26 - 29:30
EN: The market is suddenly giving it a lot of profit very quickly,
29:30 - 29:34
EN: so they’re going to be looking to take profits.
29:34 - 29:38
EN: As I said, after a parabolic Sell Climax, a Parabolic Wedge Bottom,
29:38 - 29:41
EN: you have to be thinking that the market will probably go up
29:41 - 29:44
EN: for at least a couple of legs and at least 10 bars.
29:44 - 29:49
EN: One leg, pullback, two, pullback, three, so a Wedge Lower High.
29:49 - 29:50
EN: Tight Bull Channel.
29:50 - 29:52
EN: Probably not much down.
29:52 - 29:55
EN: But probably still a second leg down
29:55 - 29:59
EN: because it’s probably a minor reversal after a Tight Bear Channel.
30:02 - 30:07
EN: Once the market is clearly in control by the bears,
Slide 010
Time: 30:05
Bilingual Transcript
30:07 - 30:11
EN: bears are going to bet that the first reversal up will not get too far.
30:14 - 30:17
EN: Then we got a bull trend here – not especially big bars.
30:17 - 30:18
EN: Okay bars.
30:18 - 30:21
EN: But then a pretty good bear bar and another bear bar.
30:21 - 30:24
EN: We got a Micro Double Bottom and a Higher Low.
30:24 - 30:29
EN: Only 2 or 3 bars down, and only 4 or 5 bars up.
30:29 - 30:31
EN: Not enough bars for a major reversal.
30:31 - 30:35
EN: So yes, this could be a Higher Low Major Trend Reversal,
30:35 - 30:39
EN: but it’s probably a Higher Low minor trend reversal,
30:39 - 30:42
EN: which means probably a bull leg in a Trading Range.
30:42 - 30:45
EN: Traders will be looking for a reversal down.
30:53 - 30:55
EN: Because it’s probably a bull leg in a Trading Range,
30:55 - 30:58
EN: traders would sell below a strong bear bar here.
30:58 - 31:01
EN: 3 or 4 bull bars, might get a little bit more up.
31:01 - 31:03
EN: So maybe they sell here.
31:03 - 31:06
EN: They’ll also start selling with limit orders above bars,
31:06 - 31:09
EN: betting that if it’s a bull leg in a Trading Range,
31:09 - 31:12
EN: selling above the prior highs makes sense
31:12 - 31:15
EN: because we’re probably going to go down before too long.
31:19 - 31:24
EN: The best stop is probably above the top of the bear leg, bear trend.
31:24 - 31:28
EN: That has the highest probability of being successful.
31:28 - 31:30
EN: However, it also is the greatest risk.
31:31 - 31:36
EN: Above this Lower High, above this Sell Climax are also alternative places
31:36 - 31:38
EN: where you can put a stop.
31:38 - 31:41
EN: If it’s going to be a bear trend, if we’re going to get a Lower High, new low,
31:41 - 31:44
EN: Lower High, new low, and channel down,
31:44 - 31:47
EN: it should not go above the high of that Sell Climax.
31:47 - 31:50
EN: Any reasonable stop is good.
31:53 - 31:56
EN: All three of these are reasonable stops,
31:56 - 32:02
EN: and the wider stop loses more when it’s hit, but it loses less often.
32:02 - 32:04
EN: It gets hit less often.
32:04 - 32:08
EN: If you take 10 similar trades like this, your results will be the same
32:08 - 32:11
EN: whether you use the tighter stop, lose a little bit more often,
32:11 - 32:14
EN: or the wider stop, lose less often.
32:14 - 32:17
EN: So any reasonable stop is okay.
32:20 - 32:22
EN: Here we pulled back on the open.
Slide 011
Time: 32:20
Bilingual Transcript
32:22 - 32:24
EN: We got a Buy Climax and a pullback.
32:24 - 32:26
EN: Buy Climax and a pullback.
32:26 - 32:27
EN: Buy Climax, pullback, Buy Climax.
32:29 - 32:33
EN: You can say four consecutive Buy Climaxes – one, two, three, four
32:33 - 32:36
EN: - or you can say this is a strong enough breakout
32:36 - 32:37
EN: so we start the count right here.
32:37 - 32:39
EN: One, two, three.
32:39 - 32:42
EN: So this is a potential Parabolic Wedge Top.
32:45 - 32:47
EN: However, remember what I said.
32:47 - 32:50
EN: If it is going to be a Parabolic Wedge Top,
32:50 - 32:53
EN: you want it to fall in a fairly Tight Bear Channel.
32:53 - 32:57
EN: Instead, this went sideways in a fairly Tight Channel,
32:57 - 33:02
EN: and that reduces the probability that this is going to be a top.
33:02 - 33:03
EN: It increases the possibility
33:03 - 33:06
EN: that we’re going to go sideways and get trend resumption up.
33:10 - 33:11
EN: Look at this rally.
33:11 - 33:15
EN: We’re trying to resume up, but small dojis,
33:15 - 33:18
EN: overlap, pullback every few bars.
33:18 - 33:21
EN: Does this look like the resumption of a bull trend,
33:21 - 33:24
EN: or does this look like a bull leg in what will end up as a Trading Range?
33:24 - 33:27
EN: Just like this does not look like a bear trend,
33:27 - 33:29
EN: it looks like a bear leg in a Trading Range,
33:29 - 33:32
EN: this is probably a bull leg in a Trading Range.
33:33 - 33:35
EN: We’re getting some gaps.
33:36 - 33:38
EN: This pullback did not fall below that high,
33:38 - 33:41
EN: so that’s a sign of a strong bull trend.
33:41 - 33:45
EN: This selloff went mostly sideways instead of down (good for the bulls).
33:45 - 33:49
EN: Remember earlier I said if you are getting a Tight Channel down
33:49 - 33:52
EN: after a Parabolic Wedge Top and you get a little breakout,
33:52 - 33:56
EN: it increases the chances that you’re going to get trend resumption up.
33:56 - 34:00
EN: Here we got a gap between this high and that low.
34:00 - 34:03
EN: Does not matter that we went above here.
34:03 - 34:06
EN: You can say it’s a negative (body) gap with this high and that low.
34:06 - 34:07
EN: In any case it’s a gap.
34:08 - 34:12
EN: We might soon get trend resumption up.
34:13 - 34:14
EN: You can call it negative (body) gaps.
34:14 - 34:18
EN: Slight overlap between this pullback and this breakout point.
34:18 - 34:23
EN: Slight overlap between this pullback and that buy signal bar high.
34:23 - 34:25
EN: It’s still a sign of strength,
34:25 - 34:30
EN: and it still increases the chances that we’re going to go higher.
34:31 - 34:33
EN: Look at the size of the pullbacks.
34:33 - 34:37
EN: We have a Parabolic Wedge Top, and you could sell here, sell there.
34:37 - 34:40
EN: If you’re selling with a stop, are you making money here?
34:40 - 34:42
EN: If you’re selling with a stop, are you making money?
34:42 - 34:45
EN: If you’re selling with a stop, are you making money?
34:45 - 34:45
EN: No.
34:46 - 34:49
EN: So it’s impossible for the bears to make a profit
34:49 - 34:51
EN: because the pullbacks are so small.
34:51 - 34:56
EN: You’ve got to be thinking that we’ve got a combination of a weak looking rally,
34:57 - 34:59
EN: looks like a leg in a Trading Range
34:59 - 35:03
EN: - but all the pullbacks are small and we’re forming gaps and negative gaps.
35:03 - 35:08
EN: Those are the ingredients of a Small Pullback Bull Trend.
35:09 - 35:13
EN: I would be looking to buy, betting that we’ll get higher prices.
35:15 - 35:19
EN: Here we got trend resumption up after the Trading Range.
Slide 012
Time: 35:22
Bilingual Transcript
35:23 - 35:26
EN: We have a gap up and 2 bear bars closing on their lows.
35:27 - 35:29
EN: I think we’re Always In Short and traders
35:29 - 35:31
EN: will sell above the high of the prior bar.
35:31 - 35:34
EN: So even though this is a bull reversal bar,
35:34 - 35:38
EN: it’s only a small doji and it follows 2 much bigger bear bars.
35:38 - 35:40
EN: Probably sellers above that high.
35:41 - 35:46
EN: So we had a strong rally yesterday, and look at the follow-through today.
35:46 - 35:50
EN: It looks like either a bear leg or a Tight Trading Range.
35:50 - 35:52
EN: Not high probability for the bulls yet.
35:54 - 35:59
EN: Traders will sell below that bear bar, failed breakout above yesterday’s high,
35:59 - 36:02
EN: or they’ll sell closes, betting on at least a little bit more down.
36:04 - 36:09
EN: Now, I said after 2 big bear bars, probably at least a little bit more down.
36:09 - 36:13
EN: Bears will place a limit order as soon as that bar closes,
36:13 - 36:16
EN: a limit order to sell its high, and they’d get filled
36:16 - 36:18
EN: when this bar traded above that bar’s high.
36:19 - 36:21
EN: So that’s at least a scalp.
36:21 - 36:26
EN: For the bulls we got a leg down, a pullback, a second leg down.
36:26 - 36:27
EN: We have a small Double Bottom.
36:27 - 36:29
EN: It’s a High 2 bull flag right here.
36:29 - 36:33
EN: So that is an okay buy, and this is also a small High 2.
36:33 - 36:36
EN: High 1, failed, High 2 here.
36:36 - 36:39
EN: You can buy that or buy this.
36:39 - 36:41
EN: Stop for the bulls is still down here.
36:43 - 36:48
EN: In any case, if you did short, I probably would get out above this bar
36:48 - 36:51
EN: or above that bar or above this bar
36:51 - 36:55
EN: because this does not look like it’s going down very far.
36:55 - 36:57
EN: Looks like it’s going more sideways.
36:57 - 37:00
EN: You’ve got to look to the left, and here’s the context.
37:00 - 37:01
EN: A very strong rally.
37:01 - 37:05
EN: We gapped up and we reversed down, but it does not appear
37:05 - 37:07
EN: that we’re falling very far, very fast.
37:07 - 37:09
EN: So this might end up as a bull flag.
37:11 - 37:13
EN: Not yet high probability to buy.
37:13 - 37:17
EN: Higher probability to wait to see if we do get the bull breakout.
37:18 - 37:22
EN: But if you shorted, I would get out of the shorts.
37:22 - 37:26
EN: Again, we have a small Double Bottom and a breakout below the Double Bottom.
37:26 - 37:27
EN: Reverses up.
37:27 - 37:31
EN: This is a type of Wedge Bottom – one, two, three
37:31 - 37:33
EN: - or you can simply call it a Double Bottom,
37:33 - 37:37
EN: which is a type of High 2 bull flag, at the Moving Average.
37:37 - 37:39
EN: A reasonable buy on the open.
Slide 013
Time: 37:40
Bilingual Transcript
37:40 - 37:43
EN: Consecutive big bear bars on the open.
37:43 - 37:46
EN: Always In Short, but a very Tight Bull Channel.
37:46 - 37:48
EN: Probably not much down.
37:48 - 37:51
EN: Probably buyers around the Moving Average.
37:54 - 37:57
EN: Traders will look for a reversal up from support.
37:57 - 38:03
EN: One of the most common supports on the open is the Moving Average.
38:03 - 38:08
EN: A selloff down to support, opening reversal, and then a rally from there,
38:08 - 38:13
EN: and this little selloff could put a tail on the bottom of a bull trend day.
38:13 - 38:16
EN: So if you look at the daily chart, you might see a little tail on the bottom.
38:17 - 38:22
EN: In fact, most bull bars on the daily chart have tails on the bottom,
38:22 - 38:25
EN: and they are created by initial selloffs.
38:25 - 38:29
EN: Most big bear trend days have little tails on top.
38:30 - 38:33
EN: They’re usually created by early rallies that reverse down.
38:37 - 38:41
EN: Bull breakout, so a spike, and now we have a pullback.
38:41 - 38:42
EN: So maybe we’ll channel up.
38:45 - 38:47
EN: Traders will look to buy pullbacks.
38:47 - 38:51
EN: Another pullback to the Moving Average – here, near the Moving Average.
38:51 - 38:56
EN: Traders keep buying as the pullback reverses up.
38:59 - 39:00
EN: Take a look at this.
Slide 014
Time: 39:00
Bilingual Transcript
39:00 - 39:04
EN: Pretty strong Buy The Close finish yesterday, and today we have a gap up,
39:04 - 39:10
EN: but first 3 bars dojis, first 5 out of 6 bars dojis, and then more dojis here.
39:11 - 39:15
EN: Probably sideways until we get near the Moving Average.
39:19 - 39:21
EN: You can see we got a Tight Trading Range.
39:24 - 39:26
EN: No rush to buy.
39:26 - 39:28
EN: You could buy above this bull bar, or you could wait.
39:28 - 39:32
EN: No good buy signal bar here despite a Double Bottom
39:32 - 39:34
EN: and a small High 2 – High 1, High 2.
39:35 - 39:38
EN: Higher probability to wait for the breakout or follow-through
39:38 - 39:40
EN: or when it becomes Buy The Close.
39:47 - 39:51
EN: So we got a bull breakout of a Double Bottom bull flag near the Moving Average.
39:51 - 39:56
EN: Probably at least two legs up, and since the market
39:56 - 40:00
EN: usually has a swing beginning in the first hour or two,
40:00 - 40:03
EN: and the swing usually lasts 2 to 3 hours, this could be the start
40:03 - 40:06
EN: of a trend up for the next 2 to 3 hours.
40:06 - 40:09
EN: In fact, it turned out to be the start of a trend
40:09 - 40:11
EN: that lasted for the remainder of the day.
40:19 - 40:21
EN: None of this looks particularly strong.
Slide 015
Time: 40:20
Bilingual Transcript
40:21 - 40:23
EN: We have a lot of dojis, Tight Trading Range,
40:23 - 40:25
EN: Tight Trading Range, Tight Trading Range.
40:25 - 40:31
EN: But high, higher, higher, Higher Low, Higher Lows, Higher Low.
40:33 - 40:34
EN: We’re still in a bull channel.
40:34 - 40:37
EN: You’ve got to be really careful taking shorts.
40:37 - 40:39
EN: The pullbacks are not very big.
40:39 - 40:43
EN: It’s better to wait for a pullback, a reversal attempt,
40:43 - 40:47
EN: and bet that it will fail and then buy the reversal up.
40:48 - 40:52
EN: Every attempt to reverse down is another bull flag.
40:52 - 40:54
EN: So attempt to reverse down, bull flag.
40:54 - 40:56
EN: Look to buy the reversal up.
40:56 - 40:58
EN: Attempt to reverse down, bull flag.
40:58 - 41:01
EN: Look to buy the reversal up, either here or here
41:01 - 41:03
EN: or after this strong 2 bar reversal
41:03 - 41:06
EN: on the failed breakout below the Moving Average.
41:11 - 41:13
EN: Bears have 2 bear bars.
41:13 - 41:17
EN: Normally traders would like to see 3 or 4 consecutive bear bars
41:17 - 41:22
EN: before they conclude that the bears are winning, and because of that,
41:23 - 41:26
EN: a lot of times when there are 2 consecutive bear bars,
41:26 - 41:28
EN: bulls will start buying closes.
41:28 - 41:30
EN: So they’ll buy the close of that second bear bar,
41:30 - 41:32
EN: betting that the bears will not get three.
41:33 - 41:38
EN: Then also, they’ll be buying above bull bars on the resumption up
41:38 - 41:39
EN: - here or above that bull bar.
41:43 - 41:47
EN: Now, we tried to break to the down side, but where is the follow-through?
41:47 - 41:51
EN: So we got one bear breakout, but no follow-through bar.
41:51 - 41:55
EN: Instead we got a reversal up, and in fact this is slightly above that low.
41:55 - 42:00
EN: So we’re getting a reversal up and it’s a Double Bottom Higher Low.
42:03 - 42:08
EN: It’s better to bet that the bears will fail and that we’re going to go higher.
42:09 - 42:12
EN: We got a Buy The Close bull trend near the end of the day.
42:15 - 42:17
EN: Traders were buying closes.
42:17 - 42:24
EN: After 5 or 6 Buy The Close bars, traders have to be ready for a reversal down,
42:24 - 42:27
EN: and usually you get out below the first bear bar.
Slide 016
Time: 42:30
Bilingual Transcript
42:31 - 42:33
EN: Similar situation.
42:33 - 42:36
EN: A gap up and sideways to the Moving Average,
42:36 - 42:40
EN: but in this particular case it stayed sideways in a tight range all day.
42:42 - 42:45
EN: It looks like a good start for the bulls.
42:45 - 42:47
EN: 3 bull bars, 4 bull bars.
42:47 - 42:50
EN: I think it’s Always In Long on the close of this bar,
42:50 - 42:53
EN: and then it looks like we have a Buy The Close rally.
42:55 - 42:59
EN: The bars are small, plus we have that tail here and tail here.
42:59 - 43:00
EN: Now we have a bear bar.
43:00 - 43:04
EN: This is probably going to result in a Tight Trading Range
43:04 - 43:08
EN: that will go sideways to down to the Moving Average – and it did.
43:08 - 43:10
EN: It ended up in a very Tight Trading Range.
43:10 - 43:13
EN: Tried to break below the Moving Average, follow-through,
43:13 - 43:15
EN: but reversed up on the next bar.
43:22 - 43:25
EN: Consecutive bull bars, Always In Long.
43:25 - 43:27
EN: You can buy above the high of that inside bar.
43:28 - 43:33
EN: Here we have a decent sell signal bar, a bear bar closing on its low.
43:33 - 43:35
EN: Micro Double Top here and here.
43:35 - 43:37
EN: Small Double Top.
43:37 - 43:40
EN: The rally is weak enough, especially with this tail here
43:40 - 43:42
EN: and then the small bars and now a bear bar,
43:42 - 43:46
EN: we’re probably going sideways to down to the Moving Average.
43:46 - 43:50
EN: So the bulls who bought here will probably get out
43:50 - 43:53
EN: below that bear bar or anywhere in here.
43:57 - 43:58
EN: But look at the selloff.
43:58 - 44:01
EN: Where are the consecutive big bear trend bars?
44:01 - 44:05
EN: They got a decent bear bar here, but not consecutive big bear bars.
44:06 - 44:10
EN: Even though we sold off for a couple of hours, it’s more likely a bear leg
44:10 - 44:12
EN: in what will end up as a Trading Range – and it did.
44:12 - 44:15
EN: Bulls see a Wedge bull flag, three or four pushes down
44:15 - 44:19
EN: - one, two, three, and then four.
44:19 - 44:21
EN: They’ll buy the reversal up.
44:21 - 44:24
EN: But stop is below this, the bottom of the bull leg.
44:27 - 44:31
EN: Bears see a Double Top Lower High Major Trend Reversal.
44:31 - 44:35
EN: Bull trend, bear breakout, Double Top Lower High and a Tight Trading Range.
44:35 - 44:37
EN: 40% chance we’re going to get a swing down.
44:37 - 44:40
EN: That means 60% chance we will not.
44:44 - 44:47
EN: Here we got the breakout and follow-through, but then a reversal up
44:47 - 44:50
EN: and a slightly Higher Low Double Bottom
44:50 - 44:53
EN: with the low of the day, the open of the day.
44:53 - 44:55
EN: So bulls will buy a reversal up.
44:55 - 44:57
EN: Also, gap bar.
44:57 - 45:00
EN: A gap between the high of this bar and the Moving Average
45:01 - 45:05
EN: after the market has been above the Moving Average for 20 or 30 bars.
45:05 - 45:10
EN: Probably will lead to at least a minor reversal up, maybe a Measured Move up.
Slide 017
Time: 45:10
Bilingual Transcript
45:11 - 45:13
EN: Yesterday we sold off strongly
45:13 - 45:17
EN: and then we ended up with a bull channel into the close.
45:22 - 45:26
EN: Bull channel is a bear flag, so you’ve got to be thinking about a bear breakout.
45:26 - 45:29
EN: We tried to get a bull breakout above the bull channel.
45:29 - 45:35
EN: 75% chance it will reverse down to the bottom of the channel within about 5 bars.
45:35 - 45:38
EN: Here, it reversed down within a couple of bars.
45:40 - 45:44
EN: Also, we got a Buy Climax here, a pair of very big bull trend bars.
45:44 - 45:47
EN: It could be a Measuring Gap, but because it’s breaking
45:47 - 45:52
EN: above the top of a bull channel, you’ve got to be thinking that it might be a trap.
45:53 - 45:54
EN: Opening reversal down.
45:54 - 45:57
EN: Two legs up – one, pullback, two.
45:58 - 46:01
EN: It’s Always In Long, but this is dangerous.
46:01 - 46:04
EN: It’s possibly a 2nd Leg Trap – one, pullback, two.
46:07 - 46:10
EN: Since we’re getting a bull breakout above a bear flag
46:10 - 46:15
EN: and 75% of the time it reverses down, traders will look for a sell signal bar,
46:15 - 46:20
EN: like this bear bar, and they’ll either get out of longs or look to sell.
46:25 - 46:29
EN: Always In Long, but we reversed back into the channel.
46:29 - 46:31
EN: We’ve fallen for about 6 bars or so.
46:31 - 46:33
EN: I would wait instead of buying this.
46:33 - 46:37
EN: We have a Tight Bear Channel and a target below.
46:38 - 46:41
EN: Also, any time you’re in a fairly Broad Channel,
46:42 - 46:44
EN: you have to assume the pullbacks will be deep.
46:44 - 46:48
EN: You can see this pullback retraced about 75% of the bull leg,
46:48 - 46:52
EN: and this one retraced more than 50% of that bull leg.
46:53 - 46:57
EN: This one will probably get down at least to the bottom of this Buy Climax.
Slide 018
Time: 47:00
Bilingual Transcript
47:01 - 47:03
EN: This is a reasonable buy.
47:04 - 47:06
EN: Bulls who buy that close, they’ll buy that close.
47:07 - 47:11
EN: Most bulls would get out below that bear bar because of the failed breakout
47:11 - 47:14
EN: above the bull channel, but it’s okay to hold long
47:14 - 47:16
EN: and bet that the channel will continue up.
47:16 - 47:19
EN: However, we could get a very deep pullback.
47:19 - 47:23
EN: So if you’re buying this bull close betting that you could buy more lower
47:23 - 47:27
EN: and that we’ll get back here, allowing you to get out breakeven
47:27 - 47:32
EN: on your first entry and with a profit on your second, if you do take that buy,
47:32 - 47:36
EN: you need an appropriate stop below the bottom of the most recent bull leg.
47:36 - 47:40
EN: Putting it below the Buy Climax I think is not good.
47:40 - 47:43
EN: I think you need it below the most recent major Higher Low.
47:48 - 47:51
EN: Because it’s a decent Buy The Close rally,
47:51 - 47:54
EN: traders will look to buy above a bull bar.
47:54 - 47:55
EN: Would they buy here?
47:55 - 47:57
EN: Two legs down – one, pullback, two.
47:57 - 48:00
EN: Well, a very Tight Bear Channel, so not good.
48:00 - 48:01
EN: What about buying this?
48:01 - 48:04
EN: Leg 1, pullback, 2, Micro Double Bottom.
48:04 - 48:06
EN: I think this is an okay buy.
48:06 - 48:08
EN: You’re buying above a bull bar.
48:08 - 48:10
EN: You have two legs down even though the channel is tight.
48:12 - 48:14
EN: But if you do buy here, your stop is still down here.
48:15 - 48:19
EN: In general whenever you have a Buy The Close market and then a big reversal,
48:19 - 48:23
EN: a deep pullback, you are looking to buy above a bull bar,
48:23 - 48:25
EN: either here or here or here.
48:25 - 48:29
EN: However, you want the second entry to be at least two
48:29 - 48:31
EN: or three times bigger than a minimum scalp.
48:32 - 48:37
EN: Your goal on the second entry is to make a profit, get out around the first entry,
48:37 - 48:40
EN: breakeven on the first entry and with a profit on the second,
48:40 - 48:43
EN: and in general I want the second entry to be
48:43 - 48:47
EN: at least two or three times the size of a minimum scalp.
48:47 - 48:50
EN: For example, in the Emini the minimum scalp is 1 point.
48:51 - 48:54
EN: If I’m going to be buying above a bull bar, adding to my position,
48:54 - 48:59
EN: I want the second entry to be about 3 points below the first entry.
49:05 - 49:07
EN: It’s a channel.
49:07 - 49:09
EN: Traders sell every new high.
49:09 - 49:10
EN: This is a new high.
49:10 - 49:14
EN: You’ve got some bulls getting out here, breakeven on their first entry.
49:14 - 49:19
EN: Others will wait for a reversal down – pretty good bull breakout,
49:19 - 49:23
EN: probably at least a little bit more up, and then we have a second entry short,
49:23 - 49:26
EN: both with bear sell signal bars.
49:26 - 49:28
EN: I think this is a good exit place,
49:28 - 49:32
EN: especially since there’s not much left to the day.
49:34 - 49:38
EN: In this particular video I gave several day trading examples.
Slide 019
Time: 49:35
Bilingual Transcript
49:40 - 49:42
EN: This is Al Brooks.
49:42 - 49:45
EN: Thank you again for watching the Brooks Trading Course,
49:45 - 49:49
EN: and this video had swing trading examples.
49:49 - 49:53
EN: Many of the swing trades turned out to be scalps, which is always the case,
49:53 - 49:56
EN: but the setups were for swing trades.