It makes a lot of sense to me. But, when I am trying to fit this with "Signal, Action, Confirmation" approach, I can't find anything before the close of bar 15 (FT3, IBGS and Outside bar) that would have told me not to reverse on that bar.
Hey Romanus, I'm not exactly sure what "reversal" you are trying to avoid, but I'm going to assume you reversed on the sign for change given by bar 13 or 14 and are now saying that you would not have been able to ignore the inc. red intra-bar that gave you another sign for change to get short again. If that is not the case, then please correct my assumption. I think the point of Avi8's exercise here is to find reasons to hold, instead of trying to catch every signal for change. In this case, for the reasons I stated in my first paragraph, we would be looking to hold for the p3 down to form (instead of trying to trade the 2 to 3 price movement). We would also continue to hold short through the change signals provided by bar 15 anticipating we hadn't found our p3 yet for the reasons I gave in my second paragraph. While it is certainly possible to profitably trade the finer signals of change with this method (using the finer tools available) in order to capture every retrace movement, etc., it is typically not a good idea to attempt to do so, until you have proven you can profitably trade by catching the more significant moves that occur during the day (i.e. traverse channel FTT to traverse channel FTT). This was an excellent example of how attempting to trade the 2 to 3 movement could easily have led to one getting turned around rather quickly w/ reverses and taken losses that would erase all the gains you just made on the trade from price moving from 1 to 2. Hope that helps, -A