al-brooks-course
04 - Trading Bear Channels
Raw transcript and slide notes for 04 - Trading Bear Channels.
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- Slides: 22
- Transcript segments: 511
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Transcript 001
Time: 00:02
Bilingual Transcript
00:02 - 00:03
EN: I’m Al Brooks.
00:03 - 00:05
EN: Thank you for watching the Brooks Trading Course.
00:05 - 00:08
EN: This is a bonus video on trading bear channels.
Slide 001
Time: 00:11
Bilingual Transcript
00:13 - 00:15
EN: I want to begin by defining a bear channel.
00:15 - 00:18
EN: I want to talk about bear channels in general,
00:18 - 00:20
EN: and then there are specific types of bear channels
00:20 - 00:23
EN: that I think are worth trading differently.
00:23 - 00:26
EN: For example, a very Tight Bear Channel – for example,
00:26 - 00:31
EN: what you would see in a Small Pullback Bear Trend – or a very Broad Bear Channel.
00:33 - 00:35
EN: What is a bear channel?
Slide 002
Time: 00:35
Bilingual Transcript
00:36 - 00:38
EN: Well, this is a channel.
00:38 - 00:41
EN: We have Lower Highs, we have Lower Lows.
00:41 - 00:42
EN: That is a bear trend,
00:42 - 00:46
EN: and because we’re getting pullbacks along the way, it’s a channel.
00:52 - 00:56
EN: You can draw lines above and below it that contain it,
00:56 - 01:00
EN: and that might help you think of it as a channel.
01:00 - 01:03
EN: Every bear trend begins with some kind of a breakout.
01:03 - 01:07
EN: It can be small, it can be big, it can be multiple bars, it can be a single bar,
01:07 - 01:11
EN: and a breakout is a sign that the bulls are giving up
01:11 - 01:14
EN: and that the bears are selling aggressively.
01:14 - 01:16
EN: There’s strong agreement that the price is too high,
01:16 - 01:21
EN: that the market has to go lower to find a price where the bulls want to buy.
01:29 - 01:32
EN: I think of a breakout as a trend bar.
01:32 - 01:36
EN: Every trend bar is a breakout, every breakout is a trend bar.
01:36 - 01:40
EN: Most trend bars do not result in successful breakouts.
01:40 - 01:42
EN: Most of them reverse.
01:43 - 01:47
EN: It goes up a little bit and then reverses, goes down a little bit and reverses.
01:47 - 01:53
EN: I use the term “breakout” for a trend bar or a series of trend bars
01:53 - 01:56
EN: that has a reasonable chance of beginning a trend.
01:57 - 02:00
EN: A bear breakout is one or more bear trend bars
02:00 - 02:02
EN: that are big relative to the prior bars.
02:02 - 02:05
EN: Here we have a relatively big bear trend bar;
02:05 - 02:07
EN: maybe it’s the start of a bear trend.
02:13 - 02:16
EN: On the open, we have consecutive bear bars.
02:16 - 02:19
EN: One of them is a big bear bar, and it’s closing near its low.
02:20 - 02:23
EN: At that point, the market is Always In Short.
02:23 - 02:26
EN: The odds are that we’ll get at least a little bit more down.
02:26 - 02:31
EN: It’s possible that it could lead to a trend, and this is an example of a day
02:31 - 02:35
EN: where we did get a trend from that early bear breakout.
02:38 - 02:43
EN: A pullback is a bar that has a high above the high of the prior bar.
Slide 003
Time: 02:40
Bilingual Transcript
02:43 - 02:46
EN: So here we have a breakout; this high is above the high of the prior bar.
02:46 - 02:47
EN: It’s a pullback.
02:53 - 02:57
EN: Once there’s a pullback in a breakout, the breakout phase has ended,
02:57 - 03:00
EN: and the channel phase has begun.
03:01 - 03:06
EN: When the pullback begins to resume back down, that is the start of the channel,
03:06 - 03:11
EN: and if you get a series of Lower Highs and Lower Lows, you can call it a channel.
03:12 - 03:15
EN: Sometimes you can draw a perfect trend line across the top,
03:15 - 03:20
EN: a perfect trend channel line along the bottom, and they’re both parallel.
03:20 - 03:22
EN: That is the exception.
03:22 - 03:24
EN: Normally you’ve got to be thinking about drawing these things
03:24 - 03:29
EN: with a very fat crayon and assume that they’re not going to be perfect.
03:29 - 03:32
EN: It’s still a channel, and you trade it like a channel.
03:35 - 03:38
EN: Every trend is some type of a Spike and Channel trend,
03:38 - 03:43
EN: even though a lot of times the spike is not obvious, or the channel is not clear.
03:44 - 03:48
EN: Typically, a trend will have at least three legs,
03:48 - 03:50
EN: and any time I have a bear channel with three legs,
03:50 - 03:53
EN: I think of it as a type of a Wedge.
03:53 - 03:56
EN: Sometimes it looks like a Wedge; sometimes it does not.
03:56 - 04:00
EN: It functions like a Wedge whether or not it looks like a Wedge.
04:03 - 04:05
EN: A channel – here, a bear channel.
04:05 - 04:07
EN: It’s a bear trend.
04:07 - 04:09
EN: It’s weaker than the breakout phase.
04:09 - 04:12
EN: The breakout phase has higher probability of lower prices,
04:13 - 04:15
EN: and a channel has less probability.
04:15 - 04:17
EN: It’s constantly trying to reverse.
04:18 - 04:22
EN: If the channel is a Wedge, especially if it’s climactic,
04:22 - 04:26
EN: it will attract some profit-taking, and that could result
04:26 - 04:31
EN: in a strong minor reversal or even a major reversal.
04:31 - 04:36
EN: Every trend, every bear channel, is constantly forming Wedge Bottoms.
04:36 - 04:38
EN: Most of them are minor.
04:39 - 04:41
EN: For example, here’s a Wedge Bottom.
04:41 - 04:43
EN: Here’s a bigger one – one, two, three.
04:43 - 04:45
EN: Here’s another one – one, two, three.
04:50 - 04:54
EN: Bear channels typically break above the bear trend line,
04:54 - 04:58
EN: and then the bear channel evolves into a Trading Range.
04:58 - 05:03
EN: I think of every bear channel as a bull flag because 75% of the time,
05:03 - 05:05
EN: you’ll get a breakout above the bear channel,
05:05 - 05:08
EN: just like you would with a bull channel.
05:09 - 05:11
EN: Spike, bear channel.
05:11 - 05:16
EN: You expect an eventual bull breakout, and then an evolution into a Trading Range,
05:16 - 05:21
EN: and once it enters a Trading Range, the market’s back to BreakOut Mode.
05:21 - 05:24
EN: Traders are again waiting for the next breakout up or down.
Slide 004
Time: 05:30
Bilingual Transcript
05:31 - 05:34
EN: When the market’s in a bear channel, it’s in a bear trend.
05:34 - 05:36
EN: It’s easier to make money selling,
05:36 - 05:41
EN: especially if most of the bars are below the 20-bar Exponential Moving Average.
05:47 - 05:48
EN: Easiest way to enter?
05:48 - 05:51
EN: You get a pullback and then a bear bar closing near its low.
05:51 - 05:54
EN: You sell with a stop 1 tick below those bear bars,
05:54 - 05:56
EN: and you can do that all day long.
05:56 - 06:00
EN: You can hold for a swing trade, or you can take repeated scalps.
06:04 - 06:09
EN: If you take a short, you put your stop above the most recent major Lower High.
06:09 - 06:10
EN: If you take this short,
06:10 - 06:14
EN: you either put a stop above this bar or 1 tick above that bar.
06:15 - 06:16
EN: Same thing here.
06:16 - 06:20
EN: If you take this short, your stop is below there or above here.
06:20 - 06:23
EN: If you sell here, a Double Top,
06:23 - 06:26
EN: probably okay to put a stop above that or above that.
06:30 - 06:32
EN: Sometimes there are reasonably good buy setups,
06:32 - 06:37
EN: but if the channel is tight like this, the reversal up is probably minor.
06:37 - 06:42
EN: It probably will turn into either a bear flag or a small Trading Range, like here.
Slide 005
Time: 06:45
Bilingual Transcript
06:53 - 06:56
EN: What are some of the signs that lead you
06:56 - 06:58
EN: to think you should only be looking to sell?
06:58 - 07:02
EN: Well, most of the bars are mostly below the Moving Average, like this.
07:02 - 07:05
EN: We’re staying mostly below the Moving Average.
07:05 - 07:08
EN: Most of the pullbacks do not get far above the Moving Average.
07:09 - 07:13
EN: Most of the pullbacks only last 1, 2, or 3 bars.
07:13 - 07:17
EN: There are no consecutive big bull bars closing on their highs.
07:17 - 07:21
EN: Here, consecutive bull bars – not especially big.
07:21 - 07:25
EN: Consecutive bull bars – 4 of them, but not especially big,
07:25 - 07:27
EN: and not all closing on their highs.
07:34 - 07:40
EN: Also, if you see a lot of stop entry setups and they all are losing money,
07:41 - 07:45
EN: then it’s not good to be a stop entry buyer.
07:46 - 07:48
EN: I also look at breakout points.
07:48 - 07:51
EN: Here, we broke to the downside, below that area.
07:51 - 07:53
EN: This is the breakout point.
07:53 - 07:54
EN: This is the breakout.
07:55 - 07:58
EN: You have a better chance of making money selling
07:58 - 08:01
EN: if the pullbacks stay below the breakout point.
08:01 - 08:05
EN: Here, the pullback went above the breakout point, and when that happens,
08:05 - 08:08
EN: you will get some bulls buying below the prior low,
08:08 - 08:12
EN: looking for a scalp back up to the prior low, the breakout point.
08:12 - 08:15
EN: But sometimes you’ll have a trend where the pullbacks
08:15 - 08:20
EN: do not go above the breakout points all day, and that is a very strong bear trend.
Slide 006
Time: 08:25
Bilingual Transcript
08:29 - 08:31
EN: If the pullbacks are reasonably big,
08:31 - 08:35
EN: the bear rallies are reasonably big, bulls can also buy.
08:35 - 08:38
EN: You need to see bull bars closing on or near their highs.
08:39 - 08:42
EN: It’s better if you start seeing consecutive bull bars
08:42 - 08:45
EN: closing near their highs and above the Moving Average.
08:45 - 08:49
EN: If you see that, then the next buy setup that you see,
08:49 - 08:51
EN: it has a higher probability of being profitable.
09:00 - 09:05
EN: Here, we have a breakout, but we have a pullback above the breakout point.
09:05 - 09:10
EN: So, this is a bear channel, but I also refer to it as a stairs pattern.
09:10 - 09:11
EN: We’re stair-stepping down.
09:11 - 09:15
EN: And when you’re in a stairs pattern, bulls will buy at the prior low
09:15 - 09:18
EN: and they’ll buy more lower, expecting it to get back above that low.
09:19 - 09:24
EN: Still easier to make money selling rallies than buying breakouts.
09:27 - 09:31
EN: Breakout point, pullback twice above the breakout point,
09:32 - 09:37
EN: and therefore limit order bulls who buy at or below prior lows are making money,
09:37 - 09:42
EN: and that will encourage bulls to buy at and below every prior low.
Slide 007
Time: 09:45
Bilingual Transcript
09:49 - 09:51
EN: Limit order bulls.
09:51 - 09:56
EN: They have a limit order to buy at that low or just below, and they buy more lower.
09:56 - 09:58
EN: Are the limit order bulls making money?
09:59 - 10:01
EN: They buy here, they might buy more a couple points lower,
10:01 - 10:06
EN: a couple points lower again, and then if it gets back to their original price,
10:06 - 10:08
EN: they can get out breakeven on their first buy
10:08 - 10:10
EN: and with a profit on their lower buys.
10:11 - 10:13
EN: This is something that only experienced,
10:13 - 10:16
EN: consistently profitable traders should do.
10:16 - 10:20
EN: Most traders in a bear trend should be only looking to sell.
10:26 - 10:29
EN: Blue box, you get out breakeven on your first buy
10:29 - 10:31
EN: and with a profit on your lower buys.
10:31 - 10:35
EN: Or if you don’t take the first buy and you simply buy a fixed number of points
10:35 - 10:39
EN: below that low, you come out with a profit on your lower buys.
Slide 008
Time: 10:41
Bilingual Transcript
10:43 - 10:45
EN: Bear breakout, so a spike.
10:45 - 10:49
EN: I use the term “spike” to mean a breakout.
10:49 - 10:52
EN: We have a bear breakout, a pullback, and then a channel,
10:52 - 10:54
EN: so a Spike and Channel bear trend.
10:54 - 10:58
EN: 75% chance you’re going to break above the bear trend line,
10:58 - 11:02
EN: break above the channel, typically test the start of the channel,
11:02 - 11:04
EN: and then enter a Trading Range.
11:04 - 11:06
EN: At that point the market’s in BreakOut Mode again.
11:06 - 11:10
EN: Traders are looking for either a breakout to the upside or to the downside.
11:14 - 11:17
EN: We have a bull bar, but not a pullback.
11:17 - 11:19
EN: On a smaller timeframe chart, maybe a pullback.
11:19 - 11:22
EN: But on this chart, it’s not a pullback.
11:22 - 11:25
EN: A pullback means a bar that goes above the high of the prior bar.
11:25 - 11:28
EN: This bar went above the high of that bar.
11:28 - 11:33
EN: This is the start of a pullback, and the bears look for a reversal down
11:33 - 11:37
EN: from a pullback, and they sell below bear bars closing near their lows.
11:45 - 11:49
EN: Big bear bar, around a 50% pullback.
11:49 - 11:52
EN: Bears will sell below a bear bar closing near its low,
11:52 - 11:57
EN: betting that we’re going to form a series of Lower Highs and Lower Lows,
11:57 - 11:59
EN: a bear trend, a bear channel.
12:04 - 12:06
EN: Again, a bear channel.
12:06 - 12:11
EN: 75% chance of a bull breakout, and therefore it acts like a bull flag.
Slide 009
Time: 12:14
Bilingual Transcript
12:16 - 12:16
EN: Bear trend.
12:16 - 12:20
EN: Tried to reverse up, but then we’re getting a bear bar here.
12:20 - 12:23
EN: I always look to the left, and if it’s a possible Double Top
12:23 - 12:27
EN: – this is a Double Top bear flag – if there’s a bear bar here,
12:27 - 12:30
EN: I’d like to sell below that bear bar or this bear bar,
12:30 - 12:34
EN: because I know there’s a 40% chance I’ll break below the neckline
12:34 - 12:38
EN: of this Double Top and fall for about a Measured Move down.
12:39 - 12:40
EN: Double Top bear flag.
12:45 - 12:48
EN: The biggest bear bar in the past 20 bars,
12:48 - 12:50
EN: the biggest bear bar late in a bear trend.
12:50 - 12:52
EN: It’s probably going to reverse up.
12:52 - 12:58
EN: A bear break below a bear channel, 75% chance it’s going to reverse up.
12:58 - 13:02
EN: Sometimes you’ll get a small second leg down, but if you have a bear channel
13:02 - 13:04
EN: and a breakout below the channel,
13:04 - 13:08
EN: 75% chance you’re going to get a reversal up to the top of the channel.
13:08 - 13:12
EN: I don’t have the trend line drawn, but that’s the minimum goal.
13:12 - 13:15
EN: And sometimes you get a bull trend reversal day, like this.
13:24 - 13:29
EN: Big down, big up, failed breakout below the channel, a Sell Climax.
13:29 - 13:32
EN: Probably we’ll get at least a couple legs up.
13:32 - 13:34
EN: This is a possible low of the day.
13:34 - 13:37
EN: Reasonable to buy above a bull bar here or wait for a second bull bar.
13:37 - 13:41
EN: Or buy above any of these bull bars closing near their highs,
13:41 - 13:43
EN: betting that we might be in a swing up.
Slide 010
Time: 13:50
Bilingual Transcript
13:55 - 13:59
EN: I said if you have a bear channel, you have a 75% chance of a bull breakout.
13:59 - 14:03
EN: Well, you have a 25% chance of a successful bear breakout
14:04 - 14:08
EN: and the channel becoming an even stronger bear trend.
14:08 - 14:11
EN: So instead of a channel and then a Trading Range,
14:11 - 14:14
EN: we have a channel and then a bear breakout and then another channel.
14:22 - 14:26
EN: If it starts to break out below the bear channel and you see one
14:26 - 14:31
EN: or two big bear bars closing near their lows, traders will start to sell
14:31 - 14:34
EN: below the low of bear bars closing near their lows,
14:34 - 14:37
EN: betting that we’re entering a breakout phase again,
14:37 - 14:40
EN: a strong bear trend, and we’ll probably get a bear channel.
14:42 - 14:43
EN: Bulls are giving up.
14:43 - 14:45
EN: The bears are selling aggressively.
14:45 - 14:49
EN: This happens quickly, so do not be in denial.
14:49 - 14:52
EN: If you see a couple big bear bars closing near their lows,
14:52 - 14:56
EN: you sell with a stop below either of the bear bars,
14:56 - 14:58
EN: or you just simply sell at the market.
15:04 - 15:07
EN: Here, we have a spike and now a channel.
15:07 - 15:10
EN: We’re trying to break below the channel, and we have a pretty good bull bar.
15:10 - 15:14
EN: You’re probably going to get some profit-taking after a Wedge Bottom,
15:14 - 15:17
EN: and most bear breakouts below bear channels reverse.
15:17 - 15:20
EN: Here, we have a very good-looking buy signal bar
15:20 - 15:23
EN: – a bull bar closing near its high, decent size body.
15:23 - 15:27
EN: We’re probably going to go up for a couple legs, at least to the Moving Average.
15:27 - 15:30
EN: So bears would exit 1 tick above that bull bar,
15:30 - 15:34
EN: and bulls would buy looking for at least a test of the Moving Average.
Slide 011
Time: 15:37
Bilingual Transcript
15:38 - 15:40
EN: Four different bear channels.
15:46 - 15:49
EN: A very Tight Bear Channel, a Micro Channel.
15:50 - 15:55
EN: No bar goes above the high of the prior bar, so that is a Micro Channel.
15:55 - 15:58
EN: On a higher timeframe chart, it is a breakout.
15:58 - 16:00
EN: It’s a series of big bear bars.
16:00 - 16:03
EN: So this is an extremely strong bear trend.
16:03 - 16:05
EN: You only sell.
16:05 - 16:06
EN: You treat it like a breakout.
16:06 - 16:09
EN: It is a breakout on the next higher timeframe chart.
16:09 - 16:13
EN: If this is a 5-minute chart, we have some little bull bars;
16:13 - 16:15
EN: on a 15-minute chart, you would have no bull bars.
16:15 - 16:17
EN: You’d have a series of big bear bars.
16:17 - 16:18
EN: Only look to sell.
16:18 - 16:20
EN: And then next, we have
16:25 - 16:27
EN: a Small Pullback Bear Trend.
16:27 - 16:29
EN: The pullbacks are small, only last a few bars.
16:30 - 16:34
EN: This, too, is a breakout on the next higher timeframe chart.
16:35 - 16:38
EN: A Small Pullback Bear Trend, pullbacks only 1, 2, or 3 bars,
16:38 - 16:40
EN: and they do not go up very many ticks.
16:41 - 16:44
EN: It’s impossible to consistently make money buying.
16:44 - 16:45
EN: You should only sell.
16:45 - 16:46
EN: Treat it like a breakout.
16:50 - 16:53
EN: And here, it’s just your ordinary bear channel.
16:53 - 16:55
EN: The legs up are pretty big.
16:55 - 17:00
EN: Bulls can make money, but it’s still much easier to sell.
17:00 - 17:02
EN: Look to sell pullbacks to the Moving Average.
17:03 - 17:05
EN: Sell below a bear bar closing near its low,
17:05 - 17:07
EN: a reversal down from the Moving Average.
17:11 - 17:15
EN: When you have these bull channels with reasonably good rallies,
17:15 - 17:17
EN: bulls will buy for scalps.
17:20 - 17:22
EN: Limit order bulls, they’ll buy below bars.
17:22 - 17:25
EN: Stop order bulls will look for an occasional bull bar
17:25 - 17:29
EN: closing on its high far below the Moving Average, and they’ll buy for a scalp.
17:29 - 17:32
EN: But still easier to make money as a bear,
17:32 - 17:36
EN: selling below bear bars reversing down from around the Moving Average.
17:41 - 17:46
EN: Then finally, you’ll have a bear channel where we’re getting Lower Highs
17:46 - 17:49
EN: and Lower Lows, so it’s a bear channel, but it looks like a Trading Range,
17:49 - 17:52
EN: and for much of the time, it is a Trading Range.
17:52 - 17:58
EN: In that kind of a bear channel, both bulls and bears buy and sell,
17:58 - 18:01
EN: but they treat it like a Trading Range, and they take quick profits.
18:01 - 18:05
EN: So you buy low, you sell high, and you mostly scalp.
18:05 - 18:09
EN: It’s basically a Trading Range that is tilted slightly downward.
18:14 - 18:17
EN: If most of the bars are mostly below the Moving Average,
18:17 - 18:21
EN: it’s still going to be easier trying to look for mostly shorts.
18:22 - 18:23
EN: Mostly looking to sell.
18:26 - 18:27
EN: Bear channel.
Slide 012
Time: 18:27
Bilingual Transcript
18:29 - 18:34
EN: A spike, 4 or 5 bars up, reversal down, 10 bars up.
18:34 - 18:36
EN: But we’re forming Lower Highs, Lower Lows.
18:36 - 18:41
EN: Sometimes you’ll get above one high, but not above other highs.
18:41 - 18:42
EN: It’s still a bear channel.
18:49 - 18:54
EN: During the breakout phase, traders will sell below bear bars closing on
18:54 - 18:57
EN: or near their lows, or just sell at the market.
19:03 - 19:07
EN: Once you have a pullback, the market is now in a channel phase.
19:07 - 19:09
EN: It’s still a bear trend.
19:09 - 19:13
EN: It’s easier to make money selling below bear bars, especially at the Moving Average.
19:13 - 19:17
EN: But you can sell below any bear bar if you use the appropriate stop.
19:21 - 19:24
EN: Rally that lasted more than an hour, but look to the left.
19:24 - 19:26
EN: It might be a Double Top.
19:26 - 19:28
EN: Little bit higher, but still a Double Top,
19:28 - 19:31
EN: and there’s also three pushes up, and that is a Wedge.
19:31 - 19:33
EN: So you’ve got a Wedge rally to a Double Top.
19:33 - 19:35
EN: Not much above the Moving Average.
19:35 - 19:40
EN: Traders will look to sell a reversal down, either below this outside bar or,
19:40 - 19:42
EN: because this bull channel is tight,
19:42 - 19:45
EN: they might wait for a second sell signal below that bar
19:45 - 19:46
EN: or below any of these bear bars.
19:50 - 19:51
EN: Rally for another hour.
19:51 - 19:52
EN: Look to the left.
19:52 - 19:53
EN: Possibly a Double Top.
19:54 - 19:56
EN: Traders will look to sell a reversal down.
19:56 - 19:59
EN: We have a Micro Double Top – up, down, up.
19:59 - 20:02
EN: They could sell below the neckline, this bear bar, or sell below that bear bar.
20:08 - 20:13
EN: Now, we have a new low, but the reversal up went above the breakout point,
20:13 - 20:14
EN: so it’s a stairs pattern.
20:14 - 20:17
EN: Bulls will buy at prior lows,
20:17 - 20:23
EN: and they’ll often buy reversals up with stop orders, like here, and then here.
20:23 - 20:25
EN: A second entry buy.
20:25 - 20:27
EN: First, and then a second buy.
20:29 - 20:30
EN: Bear channel.
20:30 - 20:32
EN: The bulls are only scalping.
20:32 - 20:35
EN: As long as we keep making Lower Highs and Lower Lows,
20:35 - 20:37
EN: the bulls are only looking to scalp.
20:41 - 20:45
EN: Wedge, one, two, three, and a Parabolic Wedge.
20:45 - 20:47
EN: We’re probably going to get a couple legs up.
20:47 - 20:50
EN: Reasonable to buy with a stop above that bull bar.
Slide 013
Time: 20:55
Bilingual Transcript
20:58 - 21:03
EN: Bears look to sell rallies – rallies to around the Moving Average
21:03 - 21:07
EN: or rallies that retrace about half of the last bear leg.
21:14 - 21:19
EN: Because it’s in a bear channel and we keep making new lows and Lower Highs,
21:19 - 21:22
EN: the bears can swing trade, so they can take that sell
21:22 - 21:26
EN: and hold through this rally if they want and just rely on their stop.
21:26 - 21:29
EN: Or they can sell, take a profit around a new low,
21:29 - 21:32
EN: and then wait for the next rally and sell again.
21:34 - 21:35
EN: The bulls are only scalping.
21:35 - 21:38
EN: The bears can swing trade or scalp.
21:38 - 21:40
EN: Easier to make money as a bear.
21:40 - 21:45
EN: More sell setups than buy setups, and if you trade properly,
21:45 - 21:50
EN: your average profit selling is greater than your average profit buying.
Slide 014
Time: 21:52
Bilingual Transcript
21:55 - 22:00
EN: Here, we’re having a bear breakout, but it’s really not all that strong.
22:00 - 22:02
EN: However, it still could be the start of a bear trend.
22:05 - 22:06
EN: Look at this.
22:06 - 22:09
EN: 7 bear bars closing near their lows, not much overlap.
22:09 - 22:11
EN: This is a strong breakout.
22:11 - 22:13
EN: This is more likely the start of a bear trend,
22:13 - 22:18
EN: so we might get a spike down, a pullback, and then channel down.
22:18 - 22:20
EN: It stayed below the Moving Average.
22:20 - 22:21
EN: Bears keep selling.
22:29 - 22:33
EN: Every time you get a rally and then a bear closing near its low,
22:33 - 22:35
EN: especially near the Moving Average, traders will sell
22:35 - 22:39
EN: with a stop below the bear bars closing near their lows.
22:42 - 22:47
EN: They’ll also sell the close of big bull bars in the pullback,
22:47 - 22:49
EN: betting that the breakout attempt will fail,
22:49 - 22:52
EN: and the bear trend will continue down.
22:52 - 22:55
EN: So they can sell with a stop, the red rectangles,
22:55 - 22:59
EN: and they can sell the closes of big bull bars near the Moving Average.
23:02 - 23:05
EN: Finally, they can simply place a limit order at the Moving Average
23:05 - 23:09
EN: and sell at the Moving Average, expecting a new low.
Slide 015
Time: 23:15
Bilingual Transcript
23:15 - 23:20
EN: In a stairs pattern, where the pullbacks overlap the breakout points,
23:20 - 23:23
EN: the bulls will buy, or some bulls will buy.
23:23 - 23:25
EN: Bull scalpers.
23:29 - 23:33
EN: For example, they’ll buy at the prior low and then scale in more,
23:33 - 23:36
EN: 1 or 2 points lower, expecting it to come back here,
23:36 - 23:38
EN: where they can get out breakeven on their first trade
23:38 - 23:40
EN: and a profit on their lower trades.
23:40 - 23:42
EN: Sometimes they don’t take the first buy,
23:42 - 23:46
EN: but they will buy 1 or 2 points down, expecting the pullback.
23:46 - 23:47
EN: They want to see stairs.
23:47 - 23:50
EN: They want to see pullbacks going above breakout points,
23:50 - 23:54
EN: and once they start to see that, you will get limit order
23:54 - 23:57
EN: bulls buying below prior lows, looking for scalps.
23:57 - 24:00
EN: Beginners should not be doing that.
24:00 - 24:07
EN: It’s very hard to buy that low and see the market do this
24:07 - 24:09
EN: and then buy more instead of exit.
24:09 - 24:13
EN: So emotionally, very difficult for beginners, and they should not be doing that.
24:17 - 24:21
EN: The bulls who do it, they get out once the market bounces back
24:21 - 24:24
EN: to their original entry price at the prior low.
24:24 - 24:29
EN: So scalps, scalps, all day long if you have a stairs pattern.
24:32 - 24:36
EN: This is a relatively Small Pullback Bear Trend,
24:36 - 24:39
EN: so very difficult for bull scalpers to make money.
24:39 - 24:44
EN: Much easier to make money looking for sell signals.
Slide 016
Time: 24:45
Bilingual Transcript
24:51 - 24:54
EN: A lot of prominent tails, a lot of overlap.
24:55 - 24:57
EN: We have a new low and a bull bar.
24:57 - 25:00
EN: Bulls will buy, looking for a scalp up.
25:01 - 25:04
EN: If it’s pretty easy for stop entry bulls to make money,
25:05 - 25:09
EN: you’re probably going to get some kind of a reversal by the end of the day.
25:12 - 25:17
EN: The bears will take profits, not expecting the day to sell off into the close.
25:17 - 25:20
EN: They’re happy to have their profits; they’ll take their profits.
25:22 - 25:24
EN: We also have three consecutive Wedges today.
25:24 - 25:29
EN: Wedge bull flag, we have a rally, possibly a bull flag, Higher Low.
25:29 - 25:30
EN: Did not reverse up.
25:30 - 25:32
EN: A second Wedge, a third Wedge.
25:32 - 25:35
EN: Eventually you have to bet the bears will succeed,
25:35 - 25:38
EN: especially when the buys are small,
25:38 - 25:40
EN: and you have a lot of prominent tails and you have a lot of bull bars.
25:40 - 25:42
EN: Here you have 5 consecutive bull bars,
25:42 - 25:46
EN: 3 consecutive bull bars, 4 consecutive bull bars.
25:46 - 25:51
EN: So the bulls are in control for a long time, and repeatedly,
25:51 - 25:53
EN: and stop order bulls are making money.
25:57 - 26:02
EN: Bulls, at the end of the day, the final hour, are ready for possibly a swing up.
26:02 - 26:03
EN: They look to buy for a swing up.
26:07 - 26:08
EN: Tight Bear Channel.
Slide 017
Time: 26:10
Bilingual Transcript
26:12 - 26:16
EN: In this particular case we have a bear reversal, a Double Top bear flag,
26:16 - 26:20
EN: and then a very Small Pullback Bear Trend.
26:20 - 26:25
EN: 6, 7, 8 bars without a pullback, and then the pullback is only a little bit.
26:25 - 26:27
EN: Pullback only 1 bar.
26:27 - 26:28
EN: Small Pullback Bear Trend.
26:28 - 26:31
EN: This is a breakout on a higher timeframe chart.
26:31 - 26:34
EN: You should only be looking to sell.
26:41 - 26:44
EN: The bulls cannot make money even with limit orders.
26:45 - 26:47
EN: That means it’s a very strong bear trend,
26:47 - 26:49
EN: and it’s a breakout on a higher timeframe.
26:49 - 26:51
EN: You have to get short.
26:51 - 26:54
EN: You can sell for any reason, and you do not look to buy.
26:54 - 26:55
EN: How do you get short?
26:55 - 26:59
EN: Easiest thing is look for a bear bar closing on or near its low,
26:59 - 27:04
EN: and either sell the close or sell using a stop 1 tick below its low.
27:09 - 27:14
EN: Increasingly steep bear trend, so it’s a parabolic bear channel,
27:14 - 27:16
EN: and it’s a Spike and Channel bear trend.
27:16 - 27:20
EN: Spike down here and then a channel here, parabolic channel.
27:20 - 27:24
EN: Very Tight Bear Channel, very small, very brief pullbacks.
27:24 - 27:26
EN: Only sell, and you have to sell.
27:26 - 27:28
EN: For any reason, you’ve got to sell.
27:28 - 27:32
EN: Sell below any bear bar closing near its low – below this bear bar,
27:32 - 27:35
EN: below that bear bar, below this bear bar, below that bear bar.
27:35 - 27:38
EN: Just sell and hold for a swing down.
Slide 018
Time: 27:40
Bilingual Transcript
27:46 - 27:49
EN: Again, when you have a Small Pullback Bear Trend,
27:49 - 27:51
EN: the pullbacks do not go up very far.
27:51 - 27:53
EN: They do not last very long.
27:53 - 27:56
EN: If they last a few bars, they still do not go up very far.
27:56 - 28:00
EN: You just sell below any bear bar, especially a bear bar closing on its low,
28:00 - 28:02
EN: betting on a swing down.
28:04 - 28:06
EN: You can even just simply sell at the market.
28:10 - 28:12
EN: Also, the pullbacks are small.
28:12 - 28:15
EN: You expect them to last only 1 or 2 or 3 bars,
28:15 - 28:19
EN: and therefore you can sell above the high of any bar,
28:19 - 28:21
EN: betting that a reversal up will not get far.
28:25 - 28:27
EN: In addition, any time you see a bull bar,
28:27 - 28:30
EN: you have to assume the reversal will fail,
28:30 - 28:33
EN: and therefore you can sell the close of any bull bar.
28:36 - 28:37
EN: Broad Bear Channel.
Slide 019
Time: 28:38
Bilingual Transcript
28:40 - 28:43
EN: The rally retraces most of the prior bear leg.
28:47 - 28:50
EN: We’re trying to break above the Moving Average, and we failed.
28:51 - 28:52
EN: At a Lower High.
28:52 - 28:55
EN: This might be either a Trading Range
28:55 - 28:58
EN: - which it was for most of the day – or a Broad Bear Channel.
28:58 - 29:01
EN: Lower High, Lower High, Lower Low, Lower Low.
29:02 - 29:06
EN: Most Broad Bear Channels spend a lot of time in Trading Ranges,
29:06 - 29:08
EN: and you trade them like Trading Ranges.
29:08 - 29:11
EN: You look to buy low, you sell high, and you scalp.
29:19 - 29:23
EN: It doesn’t matter if you think of it as a Broad Bear Channel or a Trading Range.
29:23 - 29:25
EN: You trade them the same.
29:25 - 29:30
EN: They often look very bearish near the bottom and very bullish near the top,
29:30 - 29:33
EN: but that’s the exact opposite of how to trade them.
29:33 - 29:36
EN: You do not want to be buying high, you do not want to be selling low
29:36 - 29:40
EN: in a Trading Range, or a Broad Bear Channel.
Slide 020
Time: 29:45
Bilingual Transcript
29:52 - 29:58
EN: A Broad Bear Channel behaves more like a Trading Range than like a bear trend.
29:58 - 30:02
EN: You trade it like a Trading Range: buy low, sell high, scalp.
30:02 - 30:04
EN: Second signals are good.
30:04 - 30:08
EN: If you get Double Tops near the top, Double Bottoms, Micro Double Tops,
30:08 - 30:13
EN: Micro Double Bottoms, Wedge Bottoms, they’re all higher probability entries.
30:15 - 30:18
EN: Here, a Wedge Top and a second entry sell.
30:21 - 30:25
EN: A Double Top and a small Wedge, sell below the bear bar.
30:27 - 30:30
EN: Tried to reverse up, tried to reverse up a second time.
30:30 - 30:34
EN: It’s a High 2, a Micro Double Bottom, and it’s a big Double Bottom.
30:34 - 30:36
EN: That’s a reasonably good buy.
30:40 - 30:41
EN: Parabolic Wedge.
30:41 - 30:43
EN: Three pushes up in a Tight Channel.
30:43 - 30:46
EN: Also near a prior high, so it’s a big Double Top,
30:46 - 30:48
EN: and we have a Micro Double Top.
30:48 - 30:50
EN: Up and down, up and down.
30:50 - 30:52
EN: That’s a good sell.
30:55 - 30:56
EN: A Double Bottom.
30:57 - 31:00
EN: Higher probability buying above the neckline,
31:00 - 31:03
EN: or even above this bar, for that matter.
31:06 - 31:08
EN: Another Parabolic Wedge.
31:08 - 31:09
EN: Sell below the bear bar.
31:10 - 31:12
EN: Lower High, Parabolic Wedge.
31:15 - 31:17
EN: We have a failed breakout below a Double Bottom.
31:17 - 31:19
EN: If you want, you can call it a Double Bottom.
31:19 - 31:21
EN: You can call it a big High 2.
31:21 - 31:22
EN: High 1, High 2.
31:22 - 31:24
EN: A doji bar.
31:24 - 31:27
EN: You can buy above the doji bar because it’s a High 2 and a Double Bottom,
31:27 - 31:30
EN: or you can buy above a bull bar closing near its high.
Slide 021
Time: 31:33
Bilingual Transcript
31:34 - 31:36
EN: I want to review what I just went through.
31:37 - 31:40
EN: Sometimes you’ll have a bear channel with no pullbacks.
31:40 - 31:44
EN: Every bar has a high at or below the high of the prior bar.
31:44 - 31:47
EN: It’s a breakout on a higher timeframe chart.
31:47 - 31:49
EN: You trade it like a breakout.
31:49 - 31:50
EN: You only look to sell.
31:50 - 31:52
EN: Easiest way to do it: just look for any bear bar
31:52 - 31:56
EN: closing near its low and sell the close, or sell just below the low.
31:57 - 32:00
EN: Sometimes you’ll have a Tight Bear Channel where there are pullbacks.
32:00 - 32:02
EN: This is a Small Pullback Bear Trend.
32:02 - 32:06
EN: On a higher timeframe chart, it’s also a breakout,
32:06 - 32:10
EN: and if the pullbacks are small like this, it’s better only to look to sell.
32:10 - 32:14
EN: Again, if you have any kind of a pullback – 1, 2, 3 bar pullback
32:14 - 32:16
EN: – wait for a bear bar closing near its low
32:16 - 32:18
EN: and sell with a stop below the low of the bar.
32:19 - 32:23
EN: Other times you’ll get pullbacks that last 5 or 10 bars,
32:23 - 32:26
EN: and every new low, traders buy it.
32:26 - 32:28
EN: This is your typical bear channel.
32:28 - 32:33
EN: Stop order bulls will look to buy above decent bull bars,
32:33 - 32:35
EN: far below the Moving Average, for a scalp.
32:35 - 32:39
EN: Limit order bulls will buy at prior lows and buy more lower.
32:39 - 32:42
EN: Easier to make money only looking to sell.
32:42 - 32:44
EN: We keep reversing at the Moving Average.
32:44 - 32:46
EN: When it’s at the Moving Average, look for a bear bar
32:46 - 32:49
EN: closing near its low and sell below the bear bar.
32:50 - 32:53
EN: And finally, sometimes you’ll see a Broad Bear Channel
32:53 - 32:55
EN: where it looks like a Trading Range,
32:55 - 32:58
EN: but it’s still forming Lower Highs and Lower Lows.
32:58 - 33:03
EN: You can buy low, sell high, and scalp because it’s a bear trend,
33:03 - 33:07
EN: it’s in general slightly easier to make money selling,
33:07 - 33:09
EN: and it’s better to focus on selling.
33:13 - 33:15
EN: I began by talking about a bear channel.
Slide 022
Time: 33:15
Bilingual Transcript
33:15 - 33:17
EN: A bear channel is simply a bear trend
33:17 - 33:20
EN: that has a series of Lower Highs and Lower Lows.
33:21 - 33:25
EN: Then I talked about how to trade bear channels.
33:25 - 33:29
EN: Next, I moved on to talking about special types of bear channels,
33:29 - 33:33
EN: like very Tight Bear Channels, Small Pullback Bear Trends.
33:33 - 33:36
EN: You treat them like breakouts, and you only look to sell.
33:37 - 33:40
EN: And finally, I talked about Broad Bear Channels,
33:40 - 33:43
EN: which are basically Trading Ranges that are tilted down,
33:43 - 33:45
EN: and you trade them like Trading Ranges.
33:45 - 33:49
EN: You look to buy low, you sell high, and you take quick profits.
33:53 - 33:54
EN: I’m Al Brooks.
33:54 - 33:56
EN: Thank you for watching the Brooks Trading Course.
33:56 - 33:59
EN: This is a bonus video on trading bear channels.