al-brooks-course
07 - Trading When Market Is in a Bull Channel
Raw transcript and slide notes for 07 - Trading When Market Is in a Bull Channel.
Overview
- Slides: 21
- Transcript segments: 842
- 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
Study Notes下继续整理。
Source Media
Transcript 001
Time: 00:02
Bilingual Transcript
00:02 - 00:06
EN: Hi, I’m Al Brooks, and I want to thank you for watching this video.
00:06 - 00:10
EN: Today I’m going to be talking about trading when a market is in a bull channel.
00:10 - 00:15
EN: I gave this talk at the Money Show in Orlando in 2020.
00:16 - 00:19
EN: This is a bonus video in the Brooks Trading Course.
Slide 001
Time: 00:20
Bilingual Transcript
00:21 - 00:24
EN: I want to begin by talking about what a bull channel is.
00:24 - 00:27
EN: Basically, it’s just a bull trend.
00:27 - 00:30
EN: If you look at the chart, if it begins at the lower left
00:30 - 00:33
EN: and ends at the upper right, it’s probably in a bull channel.
00:34 - 00:36
EN: There are several types of bull channels.
00:36 - 00:39
EN: I classify them depending on their strength.
00:39 - 00:43
EN: Tight Bull Channels are extremely strong bull trends.
00:43 - 00:45
EN: They are Small Pullback Bull Trends.
00:45 - 00:46
EN: The pullbacks are small and brief.
00:47 - 00:50
EN: When you have a very Tight Bull Channel, you trade it exactly the same
00:50 - 00:53
EN: as a breakout: you only want to be looking to buy.
00:53 - 00:59
EN: Then a Broad Bull Channel spends a lot of its time sideways, in a Trading Range.
00:59 - 01:01
EN: The more it looks like a Trading Range,
01:01 - 01:03
EN: the more you trade it like a Trading Range.
01:03 - 01:05
EN: You buy low, you sell high, and you take quick profits.
01:09 - 01:12
EN: All right, so what exactly is a bull channel?
Slide 002
Time: 01:12
Bilingual Transcript
01:14 - 01:18
EN: Again, if you look at the chart and it begins in the lower left
01:18 - 01:21
EN: and ends in the upper right, it’s a bull trend.
01:21 - 01:24
EN: Almost always, it’ll have pullbacks, and that means it’s in a channel,
01:24 - 01:28
EN: a series of Higher Lows and Higher Highs.
01:28 - 01:31
EN: Pullbacks can be very small – for example, right here,
01:31 - 01:34
EN: here’s a very small pullback – or they can be big.
01:39 - 01:44
EN: I think of every bull trend as beginning with a breakout.
01:44 - 01:46
EN: Here we have 3 consecutive bull trend bars
01:46 - 01:50
EN: with good size bodies closing on or near their highs.
01:50 - 01:51
EN: That is a breakout.
01:51 - 01:53
EN: A breakout can be one bar, it can be several bars.
01:53 - 01:55
EN: It can be small, it can be big.
01:56 - 02:01
EN: When the market’s in its breakout phase, it’s in a strong phase in a bull trend.
02:01 - 02:02
EN: At some point you have a pullback.
02:03 - 02:05
EN: The low of this bar went below the low of that bar,
02:05 - 02:09
EN: plus we have a couple small bear bodies, so that is a pullback.
02:09 - 02:14
EN: It grew for about 10 bars, but the low of the pullback held above the bottom
02:14 - 02:20
EN: of the breakout, the Buy Climax, and therefore you think of this as a Higher Low,
02:20 - 02:23
EN: and you’re probably going to get a Higher High, and at that point you’re starting
02:23 - 02:25
EN: to think that you have a bull channel.
02:31 - 02:36
EN: Every trend bar is a breakout, and every breakout is a trend bar.
02:36 - 02:38
EN: A breakout can be several trend bars.
02:38 - 02:42
EN: I reserve the term “breakout” for bars that have a reasonable chance
02:42 - 02:47
EN: of beginning a trend, and a bull breakout is one or more bull trend bars,
02:47 - 02:50
EN: and they’re relatively big compared to the prior bars.
02:50 - 02:53
EN: This is a bull breakout; this is a small bear breakout.
02:53 - 02:55
EN: This is a small bear breakout, but it failed.
02:55 - 02:56
EN: We went up.
02:56 - 02:57
EN: This is a small bull breakout.
02:57 - 03:01
EN: After 4 bear bars, it’s probably not going to go very far,
03:01 - 03:03
EN: so this bull breakout failed.
03:03 - 03:05
EN: Here is a much stronger bull breakout.
03:05 - 03:08
EN: The close of this bar is above the high of that bar, so we have a gap between
03:08 - 03:12
EN: that close and this high, and it’s also above the bear trend line.
03:12 - 03:15
EN: So it’s a breakout that lasted 2 bars, and this third bar,
03:15 - 03:17
EN: there was some profit-taking at the end.
03:17 - 03:18
EN: That’s what that tail is.
03:18 - 03:20
EN: Another breakout and another breakout.
03:20 - 03:24
EN: A bear breakout, a big bear bar closing on its low, closing below that low,
03:24 - 03:27
EN: closing below this low, a minor Higher Low.
03:27 - 03:31
EN: But the next bar reversed up, so it’s a failed bear breakout.
03:31 - 03:35
EN: The bears were hoping that this was going to be the start of a trend,
03:35 - 03:36
EN: but it was a bear trap.
03:36 - 03:40
EN: It trapped bears into hoping a bear trend was beginning,
03:40 - 03:44
EN: and there were more bulls willing to buy below that low and more bulls willing
03:44 - 03:47
EN: to buy this close than bears willing to sell down here.
03:47 - 03:49
EN: The bulls regained control.
03:54 - 03:58
EN: A pullback in a bull trend simply means the low of the bar is below the low
Slide 003
Time: 03:55
Bilingual Transcript
03:58 - 04:02
EN: of the prior bar, and preferably one of the two bars has a bear body.
04:02 - 04:05
EN: That usually signifies a pullback.
04:05 - 04:09
EN: Sometimes a pullback can last just a single bar; sometimes it can last many bars.
04:09 - 04:12
EN: Sometimes it can be simply sideways.
04:12 - 04:16
EN: Here, the lows of these bars did not fall below the low of any bar,
04:16 - 04:18
EN: but the high of this bar is below the low of that bar.
04:18 - 04:20
EN: So it’s a small pullback.
04:25 - 04:28
EN: Once you start to get a pullback from a breakout,
04:28 - 04:32
EN: you’re entering the channel phase, and here we’re resuming up,
04:32 - 04:34
EN: so now you’ve got to be thinking
04:34 - 04:37
EN: that maybe this is the low of a developing channel.
04:37 - 04:40
EN: So we have a spike, a pullback, and then a bull channel.
04:40 - 04:44
EN: A Spike and Channel bull trend is a very common type of trend.
04:44 - 04:47
EN: In fact, just about every bull trend is a variation
04:47 - 04:49
EN: of a Spike and Channel bull trend.
04:53 - 04:57
EN: A series of Higher Highs and Higher Lows.
05:01 - 05:04
EN: Channel, it’s weaker than the breakout phase.
05:04 - 05:07
EN: The breakout phase, if you’re trading it, you simply buy at the market
05:07 - 05:10
EN: or you buy with a stop above the high of the prior bar.
05:10 - 05:14
EN: Once it is getting deep pullbacks, it becomes a little trickier
05:14 - 05:18
EN: because once you get above the prior high, you tend to get some profit-taking.
05:18 - 05:21
EN: So traders do not want to buy above the high.
05:21 - 05:22
EN: They want to buy pullbacks.
05:23 - 05:25
EN: When you have a Spike and Channel trend,
05:25 - 05:29
EN: typically you’re looking for at least three legs up.
05:29 - 05:33
EN: The breakout is the first leg, this is the second, that’s the third.
05:33 - 05:38
EN: Once you’ve had three legs up in a channel, you have a variation of a Wedge.
05:38 - 05:39
EN: Sometimes you get a reversal.
05:43 - 05:47
EN: When you have a bull channel, 75% chance you’re going
05:47 - 05:51
EN: to get a break below the channel, and therefore I think of every bull channel,
05:51 - 05:55
EN: even though it’s a bull trend, I think of every bull channel as a bear flag
05:55 - 05:59
EN: because there’s a 75% chance you’re going to get a bear breakout.
06:00 - 06:05
EN: What typically happens is you have a very strong bull trend, a breakout,
06:05 - 06:10
EN: you have a bull channel, you have a bear breakout and then a swing down,
06:10 - 06:13
EN: and then the pattern converts into a Trading Range.
06:13 - 06:16
EN: So a breakout, a channel, and then a bear breakout,
06:16 - 06:19
EN: and then the whole thing becomes a Trading Range.
06:19 - 06:23
EN: Very often there’ll be a selloff down to this low or that low,
06:23 - 06:26
EN: the beginning of the channel, and then when you look at the screen you’ll say,
06:26 - 06:30
EN: “Ah, the Trading Range began over here.” So that entire bull channel,
06:30 - 06:35
EN: in hindsight, is usually a bull leg in what will become a Trading Range.
Slide 004
Time: 06:40
Bilingual Transcript
06:42 - 06:46
EN: Even though we have deep pullbacks, it’s still a bull trend,
06:46 - 06:49
EN: and therefore it’s easier to make money looking to buy.
06:50 - 06:52
EN: That’s especially true if most of the bars
06:52 - 06:54
EN: are above the Moving Average, as they are here.
06:57 - 06:59
EN: What’s the easiest way to buy?
06:59 - 07:02
EN: If you know you’re in a bull trend – here, you’re in a breakout,
07:02 - 07:06
EN: so it’s a bull trend; here you’ve got another breakout – you simply place an order
07:06 - 07:11
EN: to buy 1 tick or 1 pip above the high of the prior bar
07:11 - 07:13
EN: if the prior bar closes on or near its high.
07:13 - 07:16
EN: There are lots of opportunities to do this.
07:16 - 07:20
EN: You don’t take every trade; you’re simply looking to get long.
07:21 - 07:23
EN: If you get a reversal down, you can take profits
07:23 - 07:26
EN: and then look for the next buy signal and buy again.
07:29 - 07:34
EN: Once you’re long, you look down to the bottom of the most recent breakout,
07:34 - 07:35
EN: and that’s where you put your stop,
07:35 - 07:38
EN: 1 tick or 1 pip below the bottom of the most recent breakout.
07:38 - 07:43
EN: If you bought here and you did not exit and you held long,
07:43 - 07:47
EN: once it starts to turn up, either here or here, instead of your stop here,
07:47 - 07:49
EN: you’d raise your stop to here.
07:49 - 07:52
EN: Once the market is up here – or let’s say over here.
07:52 - 07:53
EN: We’re starting to break out again.
07:54 - 07:57
EN: The stop for the traders who bought here is below the bottom
07:57 - 08:00
EN: of the most recent leg up, the most recent breakout.
08:00 - 08:01
EN: Their stop is here.
08:01 - 08:05
EN: And the traders who bought anywhere earlier, if they’re still long,
08:05 - 08:09
EN: they raise their stop to below the bottom of the most recent breakout, down here.
08:09 - 08:14
EN: So your stop placement is not related to your entry price.
08:14 - 08:18
EN: Your stop placement is related to what the price action is doing.
08:18 - 08:22
EN: You want your stop below the most recent breakout after a bull trend resumes.
08:22 - 08:24
EN: So you look for a resumption of the bull trend;
08:24 - 08:28
EN: if the resumption is reasonably strong – 1 big bull bar,
08:28 - 08:33
EN: 2 big bull bars can be enough to decide that the stop should be raised.
08:33 - 08:36
EN: Sometimes it takes 3 or 4 or 5 smaller bars,
08:36 - 08:39
EN: and then you raise the stop to below the bottom of that leg up.
08:44 - 08:46
EN: When the market’s in a bull channel,
08:46 - 08:49
EN: there are often several opportunities to sell.
08:49 - 08:54
EN: For example, here we have a Buy Climax and a reversal down.
08:54 - 08:58
EN: You can call it a Parabolic Wedge – one, pause, two, pause, three.
08:58 - 09:01
EN: Three legs up, so this is a Tight Bull Channel,
09:01 - 09:03
EN: and you have a decent sell signal bar,
09:03 - 09:07
EN: so it’s reasonable to sell below either of those bars closing on their lows.
09:07 - 09:10
EN: You’re not looking for a bear trend; you’re looking for a pullback.
09:10 - 09:12
EN: Here, we pulled back for about 10 bars.
09:12 - 09:14
EN: Maybe here we’ll pull back for about 10 bars.
Slide 005
Time: 09:20
Bilingual Transcript
09:23 - 09:25
EN: You have a bull channel.
09:25 - 09:28
EN: When you look at it, you can buy, you can sell.
09:28 - 09:30
EN: But if most of the bars are above the Moving Average
09:30 - 09:34
EN: and most of the pullbacks do not get far below the Moving Average,
09:34 - 09:38
EN: and most of the pullbacks stay above the most recent Higher Low,
09:38 - 09:40
EN: then you should be looking mostly to buy
09:40 - 09:43
EN: – although sometimes there are some sell opportunities.
09:51 - 09:55
EN: I also look for consecutive big bear bars closing below the Moving Average.
09:55 - 09:58
EN: We have a small bear bar here and a big bear bar here.
09:58 - 10:02
EN: The bears really needed one more bear bar, and they did not get it.
10:02 - 10:04
EN: If they had a second bear bar that looked like this,
10:04 - 10:08
EN: then we’d have the opposite of this, consecutive big bull bars.
10:08 - 10:09
EN: You’re probably going higher.
10:09 - 10:13
EN: The bears almost did what they needed to do.
10:13 - 10:14
EN: They had 1 big bear bar.
10:14 - 10:17
EN: They did not get a second, and that’s a bear trap.
10:17 - 10:21
EN: And because traders will look at the market differently
10:21 - 10:24
EN: if the bears get 2 big bear bars closing below the Moving Average,
10:24 - 10:28
EN: a lot of bulls will buy the close of that bar, betting that the bears
10:28 - 10:32
EN: will be unable to get a second consecutive big bear bar, another example.
10:32 - 10:36
EN: The bears needed probably one more good size bear body
10:36 - 10:38
EN: to take control over the market.
10:38 - 10:41
EN: The bulls knew that, and the bulls bought that close,
10:41 - 10:44
EN: trying to prevent the bears from getting their second consecutive bear bars.
10:46 - 10:49
EN: When you’re in a bull trend or a bull channel,
10:49 - 10:53
EN: most of the stop entry sell signals will lose money, the stop order bears.
10:53 - 10:54
EN: They’re mostly going to lose money.
10:54 - 10:57
EN: For example, you’re not going to sell below here.
10:57 - 10:59
EN: You’re not going to sell below here.
10:59 - 11:02
EN: Here, you might’ve been able to make a little money, but not much.
11:02 - 11:04
EN: You’re not going to sell below there.
11:04 - 11:06
EN: If you did, you would’ve lost money.
11:06 - 11:08
EN: If you sold below here, you would’ve lost money.
11:08 - 11:11
EN: If you sold below here, betting on a continuation of the bear trend,
11:11 - 11:13
EN: you would lose money.
11:14 - 11:19
EN: This is a pullback, and the bottom of the pullback overlaps the breakout point.
11:19 - 11:23
EN: You have a breakout above this high and the rally continued up,
11:23 - 11:25
EN: but it pulled back below that high.
11:25 - 11:29
EN: Here, we have a breakout point, a reversal down, and we broke above it.
11:29 - 11:34
EN: Not a very strong reversal, but again, look at the low of these bars.
11:34 - 11:36
EN: The pullback fell below the breakout point.
11:36 - 11:41
EN: That’s a stairs pattern, and whenever the market is having a stairs pattern,
11:41 - 11:45
EN: you will get bears placing limit orders to sell at the prior high
11:45 - 11:50
EN: and sell more higher, betting that either the market will go right down
11:50 - 11:55
EN: and they can make a profitable short, or it’ll come back to their original sell
11:55 - 11:58
EN: and they’ll get out breakeven on their first sell
11:58 - 11:59
EN: and with a profit on a higher sell.
Slide 006
Time: 12:05
Bilingual Transcript
12:06 - 12:10
EN: If the pullbacks are big – here, we retraced more than half of the breakout;
12:10 - 12:15
EN: here, we retraced about half of the bull breakout – bears will start to sell.
12:16 - 12:19
EN: But if you’re going to sell, you want to sell early, you want to sell high,
12:20 - 12:24
EN: and it’s better to sell below a bear bar closing on or near its low.
12:24 - 12:27
EN: And if a bull channel is tight, the probability is higher if you wait
12:27 - 12:31
EN: for a couple bear bars or if you wait for a second sell.
12:31 - 12:32
EN: This is a very strong rally.
12:32 - 12:34
EN: Nobody’s going to sell there.
12:35 - 12:38
EN: Some traders might want to sell here, but it’s also a bull bar.
12:38 - 12:41
EN: Instead, if they’re going to sell, they’ll sell here,
12:41 - 12:45
EN: betting that maybe we’ll retrace half of that rally.
12:45 - 12:46
EN: They’re looking for a scalp.
12:46 - 12:49
EN: If you’re selling in a strong bull trend,
12:49 - 12:51
EN: you’re looking for a small profit, a scalp.
12:55 - 12:59
EN: We broke above this high to a new high, and we pulled back,
12:59 - 13:02
EN: and the pullback fell below the breakout point.
13:02 - 13:07
EN: So if a bear sold with a limit order at this high and sold more higher,
13:07 - 13:11
EN: he could place a limit order to exit his entire position back at this high.
13:11 - 13:13
EN: He would get out breakeven on his first sell
13:13 - 13:16
EN: and with a profit on his higher sells.
13:16 - 13:17
EN: A stairs pattern.
13:17 - 13:19
EN: The legs overlap.
13:20 - 13:23
EN: The pullback down overlaps the last breakout point.
13:29 - 13:33
EN: If you’re a bear in a bull channel, you’re looking to sell.
13:33 - 13:37
EN: You want to see pullbacks overlapping breakout points – this pullback overlaps
13:37 - 13:40
EN: that breakout point – because then you feel confident
13:40 - 13:44
EN: about selling at a prior high and/or higher.
13:46 - 13:48
EN: Breakout point, pullback.
13:48 - 13:51
EN: The pullback came below the breakout point.
13:51 - 13:53
EN: Bears are going to make money.
13:53 - 13:56
EN: They sell that high and they can make a small scalp.
13:56 - 13:59
EN: And they’ll keep selling at prior highs,
13:59 - 14:02
EN: betting that they’ll continue to make money.
Slide 007
Time: 14:10
Bilingual Transcript
14:10 - 14:12
EN: Bull trend.
14:12 - 14:14
EN: Some bears will automatically sell at the prior high,
14:14 - 14:17
EN: especially if you have that deep of a pullback.
14:17 - 14:21
EN: They’ll bet that whatever breakout we get here will retrace
14:21 - 14:24
EN: about half of it and pull back below the breakout point.
14:27 - 14:31
EN: If a bear sold here, he did not get to make money here,
14:31 - 14:35
EN: but he’s probably going to sell more higher – either a certain number of ticks
14:35 - 14:38
EN: or pips higher, or on a reversal down.
14:43 - 14:45
EN: Once it comes back to his original sell price,
14:45 - 14:49
EN: he gets out breakeven with a profit on his higher sell.
14:50 - 14:54
EN: It’s easier to make money buying a reversal up
14:54 - 14:57
EN: from a pullback – buying above a bull bar here, buying above a bull bar here.
14:57 - 15:00
EN: Bull bar closing near its high, buy above that bar.
Slide 008
Time: 15:03
Bilingual Transcript
15:04 - 15:05
EN: A breakout.
15:05 - 15:06
EN: Not all that strong.
15:06 - 15:09
EN: We have a breakout bar here, follow-through bar here.
15:09 - 15:10
EN: A bull bar.
15:10 - 15:12
EN: Increases the chances that we’ll go higher.
15:12 - 15:16
EN: This bar closed above the high of that bar and above this prior high.
15:17 - 15:19
EN: So it’s a breakout.
15:19 - 15:21
EN: You expect some kind of a pullback.
15:21 - 15:21
EN: We have a pullback here.
15:21 - 15:25
EN: It continued more sideways, and then you expect the market to enter a channel.
15:26 - 15:31
EN: So other legs up and pullbacks, and at some point you expect a bear break
15:31 - 15:35
EN: below the bull channel and a selloff, and then when you look back,
15:35 - 15:37
EN: the whole thing is a Trading Range.
15:37 - 15:41
EN: The bull channel turns out to be a bull leg in a Trading Range,
15:41 - 15:43
EN: and the selloff is a bear channel,
15:43 - 15:47
EN: and it’s also a bear leg in the developing Trading Range.
15:48 - 15:54
EN: The reversal down often, more often than not, comes back to around the bottom
15:54 - 15:56
EN: of the first pullback, where the bull channel began.
16:01 - 16:02
EN: Bear bar.
16:02 - 16:06
EN: Went below the low of the prior bar, and the bull breakout has probably ended.
16:07 - 16:09
EN: This is probably the start of a pullback phase.
16:14 - 16:18
EN: Three legs down – one, pause, two, pause, three.
16:19 - 16:20
EN: Possible Wedge bull flag,
16:20 - 16:24
EN: and now we have a bull breakout above that small bear trend.
16:25 - 16:26
EN: The bull trend is resuming.
16:33 - 16:34
EN: Bull channel.
16:34 - 16:35
EN: Acts like a bear flag.
16:35 - 16:39
EN: 75% chance you’ll get a break below the bull trend line
16:39 - 16:42
EN: and then a transition into a Trading Range.
Slide 009
Time: 16:45
Bilingual Transcript
16:50 - 16:54
EN: We have one push up, a second leg up, and a third leg up.
16:54 - 16:58
EN: Very often, bull channels will reverse after a third leg up.
16:58 - 17:03
EN: I think of that as a variation of a Wedge, even if it’s not converging.
17:04 - 17:06
EN: Now, what do you see here?
17:06 - 17:09
EN: You see a lot of bull bars, but look at the low of this bar
17:09 - 17:11
EN: and the low of that bar.
17:11 - 17:13
EN: Its low is at or above that low.
17:13 - 17:16
EN: The low of this bar is at or above that low.
17:16 - 17:21
EN: The low of this bar, it’s at or above that low, and 14 bars we did that.
17:22 - 17:26
EN: When you have lows that do not pull back below the low of the prior bar,
17:26 - 17:27
EN: you’re in a Micro Channel.
17:27 - 17:29
EN: This is a 14-bar bull Micro Channel.
17:29 - 17:34
EN: It ended once there was a bar with a low below the low of the prior bar.
17:35 - 17:39
EN: A bull Micro Channel is a sign of very strong bulls,
17:39 - 17:42
EN: but it’s also usually a Parabolic Wedge.
17:42 - 17:44
EN: There are usually at least three legs up.
17:44 - 17:46
EN: We have a leg up and a smaller bar.
17:46 - 17:48
EN: Bull bar and then a smaller bar.
17:48 - 17:50
EN: Another series of bull bars.
17:50 - 17:54
EN: Therefore, you can think of this as a breakout and a Parabolic Wedge channel.
17:54 - 17:57
EN: We’re trying to break above the top of it and we’re reversing.
17:58 - 18:00
EN: This is a Buy Climax.
18:00 - 18:05
EN: Remember, every bull trend bar is a breakout, and it’s also a climax.
18:05 - 18:08
EN: Sometimes it’ll lead to a trend, sometimes it’ll reverse,
18:08 - 18:10
EN: sometimes it’ll go sideways.
18:10 - 18:13
EN: When it is extreme like this, especially when it’s a third leg up
18:13 - 18:17
EN: – one, two, three – it’s going to attract some profit-taking.
18:17 - 18:21
EN: You expect at least a small two-legged pullback – one, pullback, two,
18:21 - 18:26
EN: or maybe one, pullback, two or one, pullback, two.
18:32 - 18:36
EN: Now, I said bulls will be buying closes and buying above the high of a prior bar,
18:36 - 18:40
EN: and they’ll do that all the way up until they get disappointed.
18:41 - 18:44
EN: The bulls will buy above the high of the prior bar
18:44 - 18:48
EN: as long as bars are closing near their highs, or they’ll simply buy at the market
18:48 - 18:50
EN: when a bar closes above its midpoint,
18:50 - 18:54
EN: and they’ll keep doing that until they get disappointed.
18:54 - 18:58
EN: If they see a bear bar closing near its low, they know we’re in a Buy Climax
18:58 - 19:00
EN: and they know it’s the third leg up,
19:00 - 19:05
EN: and they know this is possibly a Parabolic Wedge nested within a Wedge.
19:06 - 19:11
EN: If you’re a bull and you bought that close, you’re disappointed by this bar.
19:11 - 19:11
EN: What are you thinking?
19:12 - 19:15
EN: Some of the bulls will think, “Well, the first attempt down will fail.
19:15 - 19:20
EN: I’ll buy more lower, and then I’ll try to exit if it comes back to my original buy.”
19:21 - 19:25
EN: Traders pay a lot of attention to this test back up.
19:26 - 19:29
EN: The odds are high that the first reversal down will be bought,
19:29 - 19:31
EN: that bulls will buy that low.
19:31 - 19:36
EN: They’ll buy lower, 5 ticks, 10 ticks lower, 5 or 10 pips lower,
19:36 - 19:39
EN: betting that we’ll come back up and test that close.
19:39 - 19:41
EN: Sometimes the bull trend will continue up.
19:42 - 19:46
EN: Other times, it’ll continue up and for an instant,
19:46 - 19:49
EN: it’ll be a very big bull bar, and then it starts to pull back.
19:49 - 19:51
EN: And what does that tell you?
19:51 - 19:55
EN: It tells you that the bulls who bought this close were sufficiently disappointed
19:55 - 19:58
EN: by this bear bar that they want to get out.
19:58 - 20:01
EN: So the bulls are selling out of their longs here,
20:01 - 20:04
EN: and the bears will sell on the test of this close as well,
20:05 - 20:06
EN: trying to make the bulls give up.
20:06 - 20:11
EN: If you get that tail at that close, it’s a sign the bulls are giving up
20:11 - 20:15
EN: and we might get a couple legs sideways to down, or we may even get a bear trend.
20:17 - 20:18
EN: Micro Double Top.
20:18 - 20:23
EN: Lower High, but a Double Top and a second reversal down – one, pullback, two.
20:23 - 20:25
EN: Traders will start to look to sell below bear bars,
20:25 - 20:28
EN: especially bear bars closing near their lows.
Slide 010
Time: 20:30
Bilingual Transcript
20:32 - 20:34
EN: All right, so we’re in a bull trend.
20:34 - 20:37
EN: We have a deep pullback below that low.
20:37 - 20:38
EN: We have a new high, Higher Low.
20:38 - 20:43
EN: A new high, a deeper pullback, so possibly a Wedge here,
20:43 - 20:46
EN: but the reversal down did not get very far.
20:46 - 20:48
EN: Then we have a new high here.
20:48 - 20:51
EN: So we’re starting to get a series of Higher Highs,
20:51 - 20:53
EN: and we have Higher Lows, and it’s starting to converge.
20:54 - 20:58
EN: Remember, any time you have a bull channel,
20:58 - 21:01
EN: 75% chance you’re going to get a bear breakout.
21:01 - 21:04
EN: So you have to be looking for a reversal down.
21:06 - 21:07
EN: We tried to get a Wedge here.
21:07 - 21:09
EN: We had a bear breakout below the Wedge.
21:09 - 21:13
EN: I don’t have the line drawn in, but the bear breakout did not succeed.
21:13 - 21:16
EN: We got a reversal back up to a new high.
21:16 - 21:20
EN: Any time the market breaks above the top of a Wedge,
21:20 - 21:24
EN: 50/50 chance you’re going to get a new stronger leg up, couple legs up;
21:24 - 21:28
EN: 50/50 chance the breakout will fail and you’ll get a reversal down,
21:28 - 21:29
EN: a second reversal down.
21:35 - 21:37
EN: Breaking above the top of the Wedge and we have a bear bar.
21:37 - 21:38
EN: Consecutive bear bars.
21:38 - 21:39
EN: An outside down bar.
21:39 - 21:41
EN: Traders will start looking to sell.
21:41 - 21:44
EN: For example, they’ll sell on a stop below that bear bar
21:44 - 21:46
EN: or a bear bar closing on its low.
21:46 - 21:48
EN: They’ll sell below its low over here,
21:48 - 21:51
EN: betting that we’ll get a couple legs sideways to down.
21:51 - 21:55
EN: It could be one, two, or it could be one, pullback, two.
22:00 - 22:06
EN: We have a bull channel and we have one push up, a second leg up, a third leg up.
Slide 011
Time: 22:00
Bilingual Transcript
22:06 - 22:07
EN: Did not reverse down.
22:07 - 22:08
EN: Did not reverse down.
22:09 - 22:13
EN: But here we’re getting a bull breakout and a follow-through bar with a bull body.
22:13 - 22:16
EN: This looks like it’s going to be a successful breakout above a bull channel.
22:17 - 22:20
EN: How is this different from what I just showed?
22:21 - 22:26
EN: I said 75% chance if you have a bull channel, you’ll get a bear breakout
22:26 - 22:28
EN: and a conversion into a Trading Range.
22:28 - 22:32
EN: 25% of the time, you’re going to get a successful breakout.
22:33 - 22:37
EN: If you have a Small Pullback Bull Trend, it’s always forming Wedge Tops.
22:37 - 22:39
EN: There’ll always be a series of Wedge Tops.
22:40 - 22:43
EN: More likely than not, if you get a bull breakout
22:43 - 22:47
EN: above a Small Pullback Bull Trend, instead of getting a reversal,
22:47 - 22:49
EN: you’re going to get another leg up.
22:49 - 22:51
EN: So this is the one exception.
22:51 - 22:54
EN: If the bull channel is tight and the pullbacks are small,
22:54 - 22:58
EN: just 1 or 2 bars – here, 1 bar here, 1 bar there,
22:59 - 23:03
EN: no pullback over here – then you’re not looking for a reversal.
23:03 - 23:05
EN: You’re looking for a breakout.
23:05 - 23:10
EN: So if you’re in a Small Pullback Bull Trend, it’s always going to have Wedge Tops.
23:10 - 23:12
EN: If you see a breakout, especially with the follow-through bar,
23:12 - 23:14
EN: don’t look for it to reverse down.
23:14 - 23:17
EN: Instead, look for it to continue up.
23:22 - 23:25
EN: Small Pullback Bull Trend and you get a bull breakout.
23:25 - 23:28
EN: I would say if the trend is strong,
23:28 - 23:31
EN: there’s going to be at least a 50% chance that you’re continuing up.
23:31 - 23:35
EN: If the bull trend is not too tight and there are a lot of bear bodies,
23:35 - 23:38
EN: maybe 50/50 chance the breakout will reverse.
23:40 - 23:43
EN: If you get the breakout, you’re looking for some kind of a Measured Move,
23:43 - 23:46
EN: possibly based upon the height of the channel.
23:46 - 23:49
EN: The channel began here, the breakout was here, so maybe a Measured Move
23:49 - 23:52
EN: from that low to this high up here.
23:56 - 23:57
EN: Here’s the breakout.
23:57 - 23:58
EN: It broke out of something.
23:58 - 24:02
EN: It broke above that high and it broke above the top of the Wedge bull channel.
24:03 - 24:04
EN: We have a follow-through bar,
24:04 - 24:07
EN: so we might go up for a Measured Move – which we ultimately did.
Slide 012
Time: 24:10
Bilingual Transcript
24:11 - 24:13
EN: I like this chart.
24:13 - 24:15
EN: This is the ’87 crash.
24:15 - 24:18
EN: I started trading back here, right before the ’87 crash.
24:18 - 24:25
EN: The market fell 20 to 25% in one day, depending on which market.
24:25 - 24:29
EN: There was talk about a Wedge rally, but there’s something about this Wedge rally.
24:29 - 24:30
EN: What do you notice?
24:30 - 24:31
EN: It’s a monthly chart.
24:31 - 24:34
EN: The pullbacks, if you’re looking at a daily chart, the pullbacks are big.
24:34 - 24:38
EN: But on the monthly chart, it’s really a pretty Tight Bull Channel.
24:38 - 24:40
EN: It’s a Small Pullback Bull Trend.
24:40 - 24:42
EN: What happened over here?
24:42 - 24:47
EN: 1 bull bar, 2, 3, 4, and the bull bars all are closing on their highs.
24:47 - 24:53
EN: So this is a bull breakout above a bull channel, and it led to a huge bull trend.
24:53 - 24:57
EN: This is 1995, when the Republicans took over Congress.
24:57 - 25:04
EN: This is the most dramatic example of a bull breakout above a Wedge bull channel
25:04 - 25:06
EN: that I know of, and it was really dramatic.
25:06 - 25:10
EN: The stock market just went way, way up after the breakout.
25:13 - 25:18
EN: A series of bull bars closing on their highs, so a Buy The Close rally.
25:18 - 25:23
EN: So from a Small Pullback Bull Trend into a breakout phase.
25:23 - 25:26
EN: If this was a yearly chart, every bar being 1 year,
25:26 - 25:28
EN: it would be simply a big breakout.
25:28 - 25:34
EN: On the monthly chart, it’s 2, 3, 4, 5, 6 bull bars closing on their highs.
25:34 - 25:36
EN: That’s a very strong breakout.
25:36 - 25:38
EN: The market is certainly going higher.
25:38 - 25:41
EN: Nobody expected that much, but that’s what we got.
25:44 - 25:45
EN: How do you trade it?
25:45 - 25:49
EN: Well, after you’ve seen 2 or 3 bull bars closing on their highs,
25:49 - 25:53
EN: 4 or 5 bull bars closing on their highs, you’ve got to get long.
25:53 - 25:57
EN: You simply enter at the market or you can simply place a stop order
25:57 - 26:00
EN: to buy 1 tick above the high of the most recent bar.
26:01 - 26:02
EN: And you trade small.
26:02 - 26:07
EN: This is a monthly chart, so the stop is down here and it’s pretty far below,
26:07 - 26:11
EN: so you have to trade small enough so that your stop will not result
26:11 - 26:14
EN: in a bigger loss than you would get on any other trade.
26:14 - 26:18
EN: You don’t take all of these buys, but at some point, after 3, 4, 5 bars,
26:18 - 26:21
EN: you have to get long, put your stop down here,
26:21 - 26:24
EN: and then just wait and enjoy the ride.
26:27 - 26:30
EN: I have four examples of bull channels here.
Slide 013
Time: 26:30
Bilingual Transcript
26:33 - 26:39
EN: In a bull channel, traders buy at the Moving Average and on a reversal up.
26:40 - 26:41
EN: It’s easier to make money buying.
26:41 - 26:44
EN: Series of Higher Lows, Higher Highs.
26:45 - 26:51
EN: This is your common type of bull channel, where it’s not tight and it’s not broad,
26:52 - 26:54
EN: and this is the other extreme right here.
26:54 - 26:56
EN: Very tight and very broad.
27:00 - 27:03
EN: When you have pullbacks that last 5 or 10 bars,
27:03 - 27:06
EN: you will get bears selling above prior highs
27:06 - 27:09
EN: and with stop orders on reversals down.
27:13 - 27:16
EN: So limit order bears will sell with a limit order at the prior high,
27:16 - 27:20
EN: sell more higher, and look for a scalp, a small profit.
27:20 - 27:25
EN: Easier to make money buying, plus a buy you can swing if you want.
27:25 - 27:27
EN: For the bears, it’s only scalps.
27:31 - 27:34
EN: This is a very Tight Bull Channel, a Small Pullback Bull Trend.
27:34 - 27:36
EN: Pullback only lasting a bar.
27:36 - 27:39
EN: Here, it lasted several bars, but it did not fall very far down.
27:40 - 27:43
EN: It’s impossible for bears to consistently make money
27:43 - 27:45
EN: in a Small Pullback Bull Trend.
27:45 - 27:50
EN: So unlike your garden variety bull channel, if it’s a Small Pullback Bull Trend,
27:50 - 27:53
EN: you treat it like a breakout and you only look to buy.
27:54 - 27:57
EN: On a higher timeframe, this is a breakout.
27:57 - 28:00
EN: You don’t see any pullbacks on a higher timeframe chart.
28:04 - 28:08
EN: This is an extreme example of a Small Pullback Bull Trend.
28:08 - 28:09
EN: It’s a Micro Channel.
28:09 - 28:13
EN: We’re getting bear bars, but every low is at or above the low of the prior bar,
28:14 - 28:16
EN: so a very strong version of this.
28:16 - 28:20
EN: Since you should only buy in a Small Pullback Bull Trend,
28:20 - 28:24
EN: if you’re in a Micro Channel, a very strong type of Small Pullback Bull Trend,
28:24 - 28:26
EN: you should only buy as well.
28:26 - 28:31
EN: However, this is so extreme, you often get a climactic reversal,
28:31 - 28:34
EN: a pullback that lasts more bars and falls lower
28:34 - 28:37
EN: than what you would expect based upon how strong the trend is.
28:39 - 28:41
EN: Now, you can call this a Trading Range,
28:41 - 28:43
EN: and for a lot of the time, it is a Trading Range.
28:43 - 28:48
EN: But we have a Higher Low, a Higher Low, we have a Higher High,
28:48 - 28:50
EN: another Higher High, and another Higher High.
28:50 - 28:53
EN: So it’s a Broad Channel, but it’s basically a Trading Range
28:53 - 28:58
EN: that’s tilted upwards slightly, and since it looks a lot like a Trading Range,
28:58 - 29:00
EN: you can trade it like a Trading Range.
29:00 - 29:03
EN: Traders will look for reversals down from the top
29:03 - 29:06
EN: and they’ll look to buy reversals up from the bottom.
29:06 - 29:09
EN: So they sell high, they buy low, and since it’s not going
29:09 - 29:12
EN: to go very far up or down, or it has not been doing that,
29:12 - 29:15
EN: they’ll take relatively quick profits.
29:15 - 29:19
EN: So this is extremely bullish; this is extremely sideways.
29:19 - 29:22
EN: The more sideways it is, the deeper the pullbacks,
29:22 - 29:28
EN: the more traders will both buy and sell, and the smaller the pullbacks,
29:28 - 29:31
EN: the tighter the channel, the more traders should only be looking to buy.
29:36 - 29:40
EN: I mentioned earlier that if most of the bars were above the Moving Average,
29:40 - 29:44
EN: then it’s a bull trend and traders should only look to buy.
29:48 - 29:51
EN: Okay, your garden variety bull channel.
Slide 014
Time: 29:51
Bilingual Transcript
29:54 - 29:56
EN: Series of Higher Highs and lows.
29:56 - 30:00
EN: We have a very strong bear breakout, a brief channel,
30:00 - 30:02
EN: and then a breakout above the bear trend line,
30:02 - 30:05
EN: and we have a series of bull bars, and this is a bull breakout.
30:05 - 30:08
EN: We’re breaking out above that bear trend line.
30:08 - 30:12
EN: We’re breaking out above this Lower High in the bear trend.
30:12 - 30:13
EN: So it’s a spike up.
30:13 - 30:15
EN: Not much overlap between the bars.
30:15 - 30:18
EN: Several bars closing on or near their highs.
30:18 - 30:22
EN: At some point you get a pullback, and then you’ll expect a channel up.
30:26 - 30:28
EN: Breaking out above a Lower High.
30:29 - 30:33
EN: Possible start of a series of Higher Highs and Higher Lows.
30:35 - 30:39
EN: So now we have a Higher High and we’re starting to turn up,
30:39 - 30:42
EN: so a Higher Low, possible bull channel.
30:46 - 30:48
EN: We keep making new highs.
30:48 - 30:49
EN: So we’re in a bull trend.
30:49 - 30:51
EN: We’re getting Higher Highs and Higher Lows.
30:51 - 30:53
EN: We’re in a bull channel.
30:53 - 30:57
EN: Easier for traders to make money looking to buy – buy pullbacks,
30:57 - 31:01
EN: possibly taking partial or full profits at a prior high.
31:06 - 31:10
EN: Easiest way to trade it: you look for a pullback – the pullback can be brief,
31:10 - 31:15
EN: just a few bars – and then if you get a bull bar closing on or near its high,
31:15 - 31:17
EN: you enter with a stop above the high of that bar
31:17 - 31:21
EN: and you put a protective stop below the most recent swing up.
31:22 - 31:24
EN: If you buy that, where’s your stop?
31:24 - 31:25
EN: Is your stop here?
31:25 - 31:27
EN: Well, I probably would put it here.
31:27 - 31:30
EN: We have a new high here, this leg up again here,
31:30 - 31:33
EN: so I probably would put my stop there.
31:37 - 31:40
EN: Now, we’re getting Higher Highs and Higher Lows.
31:41 - 31:43
EN: What do you think the reversals down will do?
31:44 - 31:47
EN: You have to bet that the bear breakout attempts will fail,
31:47 - 31:51
EN: so aggressive bulls will bet that the bear reversal attempts will fail.
31:51 - 31:54
EN: They’ll buy at the market when a bear bar closes,
31:54 - 31:58
EN: or they’ll place a limit order as soon as it closes to buy at the close
31:58 - 32:00
EN: of the bar on the open of the next bar.
32:00 - 32:03
EN: The problem with that is sometimes you do not get filled.
32:03 - 32:08
EN: So for example, if you placed a limit order as soon as this bear bar closed
32:08 - 32:12
EN: to buy at the close of that bar, you probably would not have been filled.
32:12 - 32:16
EN: It looks like the low of this bar did not fall below the close of that bar.
32:16 - 32:18
EN: So better to be buying at the market.
32:21 - 32:25
EN: Some traders will simply buy with a limit order at the Moving Average,
32:25 - 32:28
EN: at the average price, betting that the market will get back
32:28 - 32:30
EN: above average and stay above average.
32:30 - 32:33
EN: So if most of the bars are above the average price,
32:33 - 32:35
EN: the average is going to go higher.
32:40 - 32:44
EN: Some traders will also place limit orders to buy somewhere in the middle
32:44 - 32:48
EN: of the last leg up; other traders, if the market is pulling back,
32:48 - 32:51
EN: will buy with a limit order below a bull bar,
32:51 - 32:55
EN: betting that there’ll be more buyers than sellers below the bull bars.
Slide 015
Time: 32:58
Bilingual Transcript
33:00 - 33:02
EN: All right, we’re rallying.
33:02 - 33:05
EN: We have a close above the high of these bars
33:05 - 33:08
EN: and a close above this Lower High in the bear trend.
33:09 - 33:11
EN: But we have a pullback below the breakout point,
33:14 - 33:18
EN: and therefore traders are thinking maybe it’s a stairs pattern.
33:18 - 33:20
EN: The breakout is not all that strong.
33:20 - 33:24
EN: We’re following a lot of sideways bars here, a lot of bars with prominent tails,
33:24 - 33:27
EN: a lot of alternating bear and bull.
33:27 - 33:29
EN: This trend is probably not going to be all that strong.
33:29 - 33:33
EN: It’ll probably be a stair pattern, so every time you get a new high,
33:33 - 33:35
EN: expect a pullback below the prior high.
33:35 - 33:40
EN: When that’s the case, you’ll start getting bears selling at a prior high
33:40 - 33:45
EN: and selling more higher, and then getting out breakeven at the prior high.
33:45 - 33:48
EN: If it immediately goes down – for example, if you sold at this high
33:49 - 33:53
EN: and it did not go up high enough to sell more, you simply sell here
33:53 - 33:56
EN: and hope that it goes far enough down for a scalp,
33:56 - 33:58
EN: and you take profits somewhere down in here.
34:02 - 34:04
EN: Bears will also sell on reversals down,
34:04 - 34:08
EN: especially if it’s a second reversal down from above a prior high.
34:11 - 34:14
EN: The bears are looking for a small profit, so they’re going to scalp.
34:16 - 34:19
EN: If they have to exit, they have to be pretty quick to take their profits.
34:19 - 34:24
EN: It’s a mistake to bet that when a market is channeling up,
34:24 - 34:26
EN: you’re going to get a bear trend.
34:26 - 34:29
EN: So you have to have a plan to take profits.
34:29 - 34:32
EN: Don’t hold, hoping that you’re going to get a bear trend,
34:32 - 34:34
EN: because you’re probably not.
34:37 - 34:40
EN: Bears selling at a prior high and on a reversal down,
34:40 - 34:42
EN: and they’re looking for a small profit.
34:42 - 34:43
EN: Same thing.
34:43 - 34:46
EN: Selling at the prior high or on a reversal down
34:46 - 34:48
EN: below the low of that bar, small profit.
34:49 - 34:51
EN: Very small profit potential for the bears.
34:51 - 34:53
EN: Much easier to make money as a bull.
34:53 - 34:57
EN: The profits are bigger and the probability is better.
35:00 - 35:03
EN: If a bear sold this reversal down – we’re trying to reverse,
35:03 - 35:07
EN: and a second time up – I would get out, especially above a bull bar.
35:07 - 35:11
EN: A second attempt to resume the bull trend at the Moving Average
35:11 - 35:16
EN: and a bull bar – that is a buy signal, and you should not be holding short
35:16 - 35:19
EN: in a bear trend if you have a credible buy signal.
35:23 - 35:24
EN: Tight Bull Channel.
Slide 016
Time: 35:24
Bilingual Transcript
35:26 - 35:31
EN: We’re getting new highs, and the pullbacks are very small, very brief.
35:31 - 35:33
EN: Some of them are simply sideways.
35:33 - 35:36
EN: It’s a Small Pullback Bull Trend.
35:36 - 35:38
EN: When you see a chart like this, you can say,
35:38 - 35:42
EN: well, a lot of prominent tails, small bodies; it’s not a very strong bull trend.
35:43 - 35:47
EN: Well, in fact, if you think about it, if the pullbacks are very small like that,
35:47 - 35:51
EN: if you go to the next higher timeframe, there may not be pullbacks at all.
35:51 - 35:55
EN: So this is probably a breakout on the next higher timeframe.
35:55 - 35:58
EN: If it’s a breakout on the next higher timeframe,
35:58 - 36:01
EN: on this timeframe you should only be buying.
36:08 - 36:10
EN: Here we have a Trading Range, mostly sideways,
36:10 - 36:14
EN: but we’re holding above the Moving Average and we’re making a new high.
36:14 - 36:16
EN: Testing the Moving Average, reversing up.
36:16 - 36:18
EN: The pullbacks are small.
36:18 - 36:21
EN: Even though we went sideways for 6 or 7 bars,
36:21 - 36:25
EN: the actual drop from the high is small, so you’ve got to be thinking
36:25 - 36:29
EN: that it’s holding above the Moving Average and we have small pullbacks;
36:29 - 36:32
EN: this might be the start of a Small Pullback Bull Trend.
36:38 - 36:41
EN: And now we’re not getting pullbacks at all.
36:41 - 36:44
EN: We’re getting sideways moves, but every low is at
36:44 - 36:46
EN: or above the low of the prior bar,
36:46 - 36:49
EN: and that was the case from this bar to that bar.
36:49 - 36:52
EN: We finally have a low below the low of the prior bar,
36:52 - 36:54
EN: so we finally have a pullback.
36:54 - 36:57
EN: We went up for 25 bars without a pullback.
36:57 - 36:59
EN: That’s a 25-bar bull Micro Channel.
36:59 - 37:01
EN: Yes, it’s unsustainable.
37:01 - 37:03
EN: At some point you’re going to get profit-taking.
37:03 - 37:04
EN: It’s climactic.
37:04 - 37:07
EN: But it’s also a very strong bull trend.
37:08 - 37:09
EN: Look at the pullbacks here.
37:09 - 37:11
EN: They did not overlap the breakout point.
37:12 - 37:13
EN: Again, here.
37:13 - 37:16
EN: We’re pulling back; did not overlap the breakout point.
37:16 - 37:18
EN: So these green lines represent open gaps.
37:18 - 37:21
EN: Pullback here, could not get below the breakout point,
37:21 - 37:23
EN: so the bears cannot make money.
37:23 - 37:25
EN: Here we have Body Gaps.
37:25 - 37:29
EN: The low of this bar is below the breakout point, but the lows of these bodies
37:29 - 37:34
EN: held above the highs of these bodies, so I call that a Body Gap.
37:34 - 37:40
EN: Again, the low fell below the breakout point, but the Body Gaps are still there.
37:40 - 37:44
EN: These bodies did not overlap that body, and that is a type of gap,
37:44 - 37:46
EN: and therefore it’s a sign of a very strong bull trend.
37:48 - 37:50
EN: If you’re trading this, you can only buy.
37:50 - 37:52
EN: The bears cannot make money.
37:53 - 37:56
EN: Any time you look at a chart and you conclude that the bears cannot make money,
37:56 - 37:59
EN: you have to buy – and you can buy for any reason.
37:59 - 38:00
EN: You can buy at the market.
38:00 - 38:04
EN: The easiest way to buy is just look for any bull bar and place an order
38:04 - 38:08
EN: to get long 1 tick or 1 pip above the high of that bull bar.
38:08 - 38:11
EN: You don’t have to take every buy, but you have to take one buy.
38:13 - 38:15
EN: This is the same chart.
38:15 - 38:19
EN: This is a 5-minute chart, and even though it never looks all that strong
38:19 - 38:22
EN: – it has a lot of very small bars, small bodies, prominent tails;
38:22 - 38:25
EN: it looks like a bull leg in what will become a Trading Range
38:25 - 38:27
EN: – but the pullbacks are very small.
38:27 - 38:30
EN: They’re nonexistent, and when that’s the case,
38:30 - 38:33
EN: if you look at a higher timeframe chart – here’s a 30-minute chart
38:33 - 38:35
EN: – it’s a bull Micro Channel.
38:35 - 38:37
EN: It’s 8 consecutive bull bars.
38:37 - 38:39
EN: It’s a breakout phase.
38:39 - 38:41
EN: If you’re looking at this, do you want to sell?
38:41 - 38:43
EN: Of course not, and therefore you should not.
38:43 - 38:44
EN: You should not be selling here.
38:46 - 38:47
EN: I want to clarify.
38:47 - 38:50
EN: I’ve talked about this as a 25-bar bull Micro Channel.
38:50 - 38:54
EN: It’s a very Tight Bull Channel, so Small Pullback Bull Trend.
38:54 - 38:58
EN: There were pullbacks along the way, here and here and here,
38:58 - 39:03
EN: but from this point on, it was a 25-bar bull Micro Channel.
39:03 - 39:05
EN: So this is the start of a bull Micro Channel,
39:05 - 39:08
EN: and the Small Pullback Bull Trend began down here.
39:14 - 39:16
EN: Again, impossible to make money selling.
39:16 - 39:19
EN: Even with limit orders, you should only look to buy.
39:22 - 39:24
EN: At some point there’ll be some profit-taking.
39:24 - 39:28
EN: A possible Final Flag, a Tight Trading Range late in a Buy Climax.
39:28 - 39:32
EN: 25 bars from here to here without a pullback.
39:32 - 39:33
EN: That is climactic.
39:33 - 39:37
EN: At some point you’re going to get a pullback, and we’re trying to resume up.
39:37 - 39:39
EN: This became the final bull flag.
39:39 - 39:42
EN: So if you’re long and you’re getting a reversal down, reasonable
39:42 - 39:47
EN: to get out below a bear bar because a lot of bulls will start to take profits,
39:47 - 39:51
EN: and after a Buy Climax, the profit-taking can last longer
39:51 - 39:55
EN: and drop the market lower than what you think is reasonable.
Slide 017
Time: 40:00
Bilingual Transcript
40:04 - 40:08
EN: Again, a lot of very small bars, a lot of sideways bars,
40:08 - 40:11
EN: a lot of small bodies, prominent tails.
40:11 - 40:16
EN: It appears to be weak rally, and therefore it appears to have low probability
40:16 - 40:20
EN: of a big profit, and it also always looks like
40:20 - 40:22
EN: it’s about to convert into a Trading Range.
40:22 - 40:25
EN: So it appears to have small potential reward if you think
40:25 - 40:27
EN: it’s going to soon reverse into a Trading Range.
40:29 - 40:30
EN: Stop is far below.
40:30 - 40:34
EN: If you’re buying up here, the stop is pretty far down, so the risk is big,
40:34 - 40:37
EN: and it appears to have small reward potential
40:37 - 40:39
EN: because you think it’s going to convert into a Trading Range.
40:39 - 40:42
EN: Therefore, you think it has big risk
40:42 - 40:45
EN: and small reward – in other words, bad risk/reward.
40:45 - 40:49
EN: But remember, on the next higher timeframe it’s a breakout.
40:49 - 40:52
EN: A breakout is a high probability trade.
40:52 - 40:54
EN: The risk is big because the stop is far below,
40:54 - 40:57
EN: but it’s a high probability of a big reward.
40:57 - 41:00
EN: So when you look at this, think about it.
41:00 - 41:05
EN: It’s a breakout on the next higher timeframe, so it’s not low probability.
41:05 - 41:08
EN: It’s high probability and high profit potential.
41:12 - 41:16
EN: So this is a high probability of a big reward.
41:16 - 41:18
EN: It’s a breakout on the next higher timeframe.
41:18 - 41:20
EN: Yes, the stop is far,
41:20 - 41:25
EN: so the risk is big – so high probability and big profit potential.
41:25 - 41:28
EN: I often talk about trading stupid.
41:28 - 41:29
EN: Don’t think too much.
41:29 - 41:32
EN: Don’t try to convince yourself into believing
41:32 - 41:35
EN: that the bull trend is going to convert into a Trading Range.
41:35 - 41:38
EN: These Small Pullback Bull Trends often look like this,
41:38 - 41:42
EN: but you look at it and say, “Hey, wait a minute, that pullback is only 1 bar,
41:42 - 41:43
EN: and it didn’t fall very far.
41:43 - 41:46
EN: Hey, same thing here.” It’s a small pullback.
41:46 - 41:49
EN: Here, it’s a pullback that just went sideways.
41:49 - 41:52
EN: It’s a small pullback, and we’re in a bull trend.
41:52 - 41:56
EN: This is a Small Pullback Bull Trend, and it can last a long time.
42:00 - 42:04
EN: Once you decide it’s a Small Pullback Bull Trend, you’ve got to get long.
42:04 - 42:07
EN: Look for any bull bar closing on or near its high.
42:07 - 42:09
EN: Buy with a stop above the high
42:09 - 42:13
EN: and put your protective stop below the most recent leg up.
42:15 - 42:18
EN: There were lots of opportunities to get long all the way up.
42:18 - 42:24
EN: Also, if you get bear closes, you have to assume the pullbacks will remain small.
42:24 - 42:29
EN: You can buy the close of bear bars all the way up, any of these bear bars.
42:32 - 42:33
EN: You can buy at the market.
42:33 - 42:38
EN: You can bet that the pullbacks will be small, and that means brief and small.
42:38 - 42:41
EN: You can buy with a limit order at the low of the prior bar,
42:41 - 42:44
EN: betting that the pullback might just last a bar or two.
42:44 - 42:45
EN: So that’s another way to get long.
42:45 - 42:47
EN: Lots of ways to get long.
42:50 - 42:51
EN: A Broad Bull Channel.
42:52 - 42:53
EN: Spends a lot of time going sideways.
42:53 - 42:56
EN: It looks like a Trading Range that’s tilted up somewhat.
42:56 - 42:58
EN: You trade it like a Trading Range.
Slide 018
Time: 43:00
Bilingual Transcript
43:01 - 43:04
EN: We have Higher Highs, Higher Lows.
43:04 - 43:07
EN: It’s a bull channel, but it’s mostly sideways,
43:07 - 43:10
EN: and therefore you trade it like a Trading Range.
43:13 - 43:19
EN: Broad Bull Channel often has lots of time when it’s going sideways.
43:19 - 43:23
EN: We have a very small Trading Range here, another one here, bigger Trading Range.
43:23 - 43:26
EN: Sometimes you have Trading Ranges within Trading Ranges.
43:26 - 43:27
EN: Small Trading Range here.
43:27 - 43:29
EN: It became part of a bigger Trading Range.
43:29 - 43:31
EN: A lot of time within Trading Ranges.
43:37 - 43:40
EN: It spends so much time going sideways, it’s easy not to notice
43:40 - 43:45
EN: that it’s also a bull trend – Higher Highs and Higher Lows.
43:45 - 43:49
EN: It doesn’t matter, because you’re going to trade it like a Trading Range.
43:49 - 43:53
EN: It has so much Trading Range price action, you trade it like a Trading Range.
43:53 - 43:56
EN: Buy low, sell high, and take quick profits (scalp).
44:00 - 44:04
EN: Possible Double Bottom, and now we have a Higher High and a Higher Low.
44:05 - 44:08
EN: It’s possible that this is going to be a bull channel, and it was.
44:08 - 44:11
EN: It was a bull channel within a bigger bull channel.
44:16 - 44:19
EN: Mostly sideways – buy low, sell high, scalp.
44:24 - 44:29
EN: When you have Trading Range price action, the reversals are often not clear,
Slide 019
Time: 44:25
Bilingual Transcript
44:29 - 44:33
EN: and you often get additional legs that go against you.
44:33 - 44:37
EN: So skilled traders will use wide stops and scale in,
44:37 - 44:41
EN: betting that if they do not pick the exact top or the exact bottom,
44:41 - 44:44
EN: the market will not go too far against them before it goes their way.
44:46 - 44:50
EN: Most traders are better off waiting for a second reversal.
44:53 - 44:55
EN: Possible Wedge bull flag.
44:56 - 44:57
EN: A Lower Low.
44:57 - 44:59
EN: Two legs down – one, pullback, two.
44:59 - 45:04
EN: So instead of buying above that bar, wait for a second attempt to go up,
45:04 - 45:06
EN: an outside up bar here or a third here.
45:09 - 45:13
EN: Trying to reverse up here, but a 6-bar bear Micro Channel,
45:13 - 45:17
EN: 5-bar bear Micro Channel – better to wait for a second buy signal
45:17 - 45:20
EN: above that bar or a bull bar closing on or near its high.
45:20 - 45:25
EN: Two legs down – one, pullback, two – so you can argue that’s a second attempt up.
45:26 - 45:32
EN: Here, we got a reversal up, reversal up, reversal up, and we got a new low.
45:32 - 45:36
EN: You can take these buys, put a stop down here or here,
45:37 - 45:40
EN: but you have to be willing to have the market go against you
45:40 - 45:45
EN: because in Trading Ranges, very often the first entry will not be the end
45:45 - 45:47
EN: of the move that goes against you.
45:51 - 45:52
EN: Different ways to draw a Wedge.
45:52 - 45:55
EN: You can also call it a High 2.
45:55 - 46:01
EN: Here we have three lows, so a Wedge here, a first reversal up here,
46:01 - 46:05
EN: a small doji after a big bear bar – I would wait for a second buy signal,
46:05 - 46:06
EN: and we have it here.
46:06 - 46:08
EN: So this is a small High 2.
46:08 - 46:10
EN: High 1, High 2, a second buy signal.
46:10 - 46:11
EN: That’s a reasonable buy.
46:11 - 46:14
EN: We’re starting to trend up in a Small Pullback Bull Trend.
46:14 - 46:17
EN: We have lots of room to the high.
46:17 - 46:20
EN: Traders will buy a above bull bars closing on their highs.
46:22 - 46:24
EN: First reversal up, very Tight Bear Channel.
46:24 - 46:29
EN: Probably not going very far, and now we’re reversing up a second time.
46:29 - 46:30
EN: It’s a higher probability trade.
46:30 - 46:35
EN: Did not get up very far, but that is a higher probability buy than that.
46:35 - 46:39
EN: If you took this buy and you held, hoping to go up here
46:39 - 46:43
EN: and instead we got that reversal down, I would exit below that bear bar.
46:49 - 46:51
EN: Reversing down from a Buy Climax.
46:51 - 46:54
EN: Two attempts to go up, both failing.
46:54 - 46:58
EN: So I would not sell below the first reversal down,
46:58 - 47:02
EN: but this is a small Double Top here; I would sell below that bear bar.
47:02 - 47:04
EN: Second entry.
47:06 - 47:09
EN: Tried to reverse down here from a Double Top.
47:10 - 47:11
EN: Did not get very far.
47:12 - 47:14
EN: Higher probability, take the second signal.
47:15 - 47:20
EN: You can see how, so often, the signals do not look all that good.
47:20 - 47:24
EN: Better to wait for a second signal, use the appropriate stop,
47:24 - 47:25
EN: and go for a quick profit.
47:28 - 47:32
EN: We have a Wedge rally and a Double Top, a decent bear bar.
47:32 - 47:36
EN: If you want, you could go for a second signal, but did not get very far.
47:36 - 47:39
EN: So if you took the second signal and we’re reversing up
47:39 - 47:43
EN: and reversing up a second time, if anything, you’re looking to buy here.
47:43 - 47:47
EN: It would be pretty hard to hold short if you sold below that bear bar
47:47 - 47:49
EN: and we had 2 bull bars trying to reverse up.
47:50 - 47:52
EN: Very difficult for most traders to trade.
47:52 - 47:57
EN: This is, I think, a really difficult example of a Broad Bull Channel
47:57 - 48:01
EN: because there are just so many reversals.
48:01 - 48:02
EN: Very difficult.
48:02 - 48:04
EN: Most traders, if they see a market like this,
48:04 - 48:06
EN: they should take very, very few trades.
48:10 - 48:13
EN: We have a Wedge Top and then we have another way to draw a Wedge Top,
48:13 - 48:16
EN: or even here – one, two, three.
48:16 - 48:18
EN: Two legs up – one, pullback, two.
48:18 - 48:21
EN: Traders might take the first reversal down,
48:21 - 48:23
EN: or they’ll wait for a second reversal down, or here.
48:27 - 48:32
EN: We have a high, a Higher High, and a Higher High, and a low and a Lower Low.
48:32 - 48:34
EN: It’s an Expanding Triangle.
48:34 - 48:36
EN: We’re breaking above the bull channel.
48:36 - 48:39
EN: Credible sell below the bear bar.
48:39 - 48:42
EN: Higher probability to wait for 2 or 3 bear bars and then sell.
Slide 020
Time: 48:45
Bilingual Transcript
48:46 - 48:51
EN: I showed this slide earlier, and this is a pretty ordinary bull channel.
48:51 - 48:53
EN: Easier to make money buying.
48:53 - 48:55
EN: Most of the bars are above the Moving Average.
48:55 - 48:59
EN: Better to buy pullbacks, although the bears can make scalps.
48:59 - 49:00
EN: We have a stairs pattern.
49:08 - 49:12
EN: Bears can sell with limit orders at prior highs, looking for scalps.
49:15 - 49:18
EN: When the pullbacks are very small and it’s very difficult for bears to make money,
49:18 - 49:22
EN: even with limit orders, it’s a Small Pullback Bull Trend.
49:22 - 49:23
EN: You should only buy.
49:23 - 49:26
EN: It’ll be a breakout on the next higher timeframe.
49:30 - 49:34
EN: A Micro Channel is an extreme version of a Small Pullback Bull Trend,
49:34 - 49:37
EN: and it always is a breakout on a higher timeframe.
49:37 - 49:39
EN: You can only buy.
49:39 - 49:42
EN: Once you decide that it looks like a Small Pullback Bull Trend,
49:42 - 49:45
EN: especially a Micro Channel, and you’re flat,
49:45 - 49:48
EN: look at any bull bar closing on or near its high.
49:48 - 49:51
EN: Place an order to buy on a stop above the high of that bar.
49:51 - 49:52
EN: You have to get long.
49:55 - 49:56
EN: A Broad Bull Channel.
49:56 - 49:58
EN: We have Higher Highs, Higher Lows.
49:58 - 50:01
EN: It’s mostly a Trading Range that’s tilted up.
50:01 - 50:07
EN: Traders are going to buy low and sell reversals down, sell high, and scalp.
50:11 - 50:16
EN: If most of the bars are above the Moving Average, it’s usually easier to buy,
50:16 - 50:18
EN: and therefore you should focus on buying.
50:23 - 50:24
EN: I talked about what a bull channel is.
50:24 - 50:27
EN: It’s simply a series of Higher Highs and lows.
Slide 021
Time: 50:25
Bilingual Transcript
50:28 - 50:31
EN: A common bull channel, easier to make money buying.
50:31 - 50:35
EN: But if the pullbacks overlap the breakout points (a stairs pattern),
50:35 - 50:38
EN: some traders will also look to sell for scalps.
50:39 - 50:42
EN: When a bull channel is very tight (a Small Pullback Bull Trend),
50:42 - 50:44
EN: it’s a breakout on a higher timeframe chart.
50:44 - 50:46
EN: You should only be looking to buy.
50:47 - 50:51
EN: If a bull channel is very broad, very deep pullbacks,
50:51 - 50:53
EN: and it spends most of its time going sideways,
50:53 - 50:55
EN: traders will trade it like a Trading Range.
50:55 - 50:59
EN: They’ll buy low, sell high, and take quick profits (scalp).
51:03 - 51:04
EN: I’m Al Brooks.
51:04 - 51:09
EN: Thank you for watching this video on trading when a market is in a bull channel.