A couple of other points. That larger bear bar around 10:55 that broke south of the range was simply a vacuum test of the bull channel low. As a matter of fact that series of bear bars prior to the larger bear bar are part of a rush to the bottom. That is typical of broader TRs and broader channels. They may rush to the bottom or top and trap in long traders at the top and short traders at the bottom. ANYTIME THERE IS A BO TOP OR BOTTOM OF A TR OR CHANNEL IT IS prudent to wait and see if there is follow-through or not and be sure to observe "how" the BO happened. That is, what is the nature of the BO.
I posted the following write up in another thread. I am also posting it here. Much explanation by Brooks is needed because there are many variations of one strategy ...MTRs. The basic principle is simple can be explained in a paragraph or two like I did on the FX thread (I will repost that chart here) but too many other factors enter. What did the bars look like in the original trend? Overlapping? Aggressive? Small? Large? What is the overall context in which that MTR is taking place? What does the test leg look like? What does the signal and entry bars look like? It it a HL MTR? Is it a LL MTR? Is the MTR taking off a resistance or support level? What does the context look like on say a 15m chart as opposed to a 5m chart? What is the angle of the original trendline? Angle of the counter move? Angle of the test (counter move of first counter move?) How many bear bars in each of the moves (original, counter, and test moves). Stacked bars or overlapping in each move? How are things in the MTR evolving in terms of the EMA? Where is the proper SL placement per the way price is printing and moving. All these things and more says something about the likelihood of the MTR being successful. Therefore, Brook's explanations can get quite detailed. Two MTR can basically look the same but the length, broadness, and the duration of it can vary. As they say "the devil is in the details." It is important to discern "what" price is doing in terms of the size it's movement but it is also just important "how" it did what it did. The three charts below show what happened on 8-16-2024 When I took that MTR for 20 points. The first chart in an overnight chart and shows the initial trend down the counter trend which was very strong then the test and finally the trend reversal that went for my 20 points. Look at the size of the original trend. Look at the bars in that move. Look at the countertrend. How many bear bars? How many PBs in that countertrend? Size of the bars? Is every PB being bought? Look at it's duration in terms of the duration of the original trend. How does it compare? Look at it's location in terms of the EMA? After the countertrend breaks above the EMA are there gaps between the EMA and the lows of the bars? This indicates strength. The bears cannot manage to push it south back through the ema until towards the end of the test move. All the same elements in reading apply to the test move and they also apply to the move from the beginning of the MTR until that ends. They all have a story to tell. Look at the second chart. It is from the perspective of day session. Gap down. Strong reversal immediately on the opening bar (which in essence is the countertrend) as the GAP down was the original trend. Now look at the third chart. It is the same chart but naked. From about 10:00 AM until and 12:50 we have a SPBL trend (small pullback bull trend). These are very strong trends but can be made with small bars and just creeping up. Look at the gaps between low of bars and the EMA during that time period. The bears could not push price back down through the EMA. This is program buying. Every PB is being bought. This is a tight bull channel. So, what is a trader going to do? Look for shorting opportunities or loo for long opportunities? So, the larger context is a downtrend on the open, a reversal, a test, and the major trend reversal morphs into a SPBL trend. Then at the end from about 12:45 pm till the close sideways (see the naked 3rd chart). At that point trading strategies change. See, remember the market cycle a BO (from something) in this case a BO of the low of the opening gap down as an attempt to close it. Then bears try to make that fail in the test. That then becomes a channel phase. BOs morph into channels. Finally, the channel at the second half of the session flattens out and morphs into a TR. Traders get in trouble when they don't understand the larger context and the progression of the market cycle. For this reason, they will short when they should be going long. They will go long when they should be shorting. Furthermore, there is more ways than one to trade this sessions PA. 1) I traded it as a MTR that morphed into a SPBL trend and just held for 20 points looking for MMs to exit on. That is ok. 2) I could have traded this by adding to my position on every PB in that SPBL trend area and hold them all until the SPBL trend flatten out. 3) Third I could scalp by shorting for 1 and 2 points maybe 3 points, on the myriads of counter moves (PB's and implied PBs if you don't know what implied PB are check my journal out) during that SPBL trend tight channel. But I would have to go for small scalps because the PB's are small. 4) I could just jump in long and after every PB starts exit and then when PB ends and trend resumes then exit that long and when the next PB starts. Rinse and repeat. 5) I could do both. Go long from start of the MTR (SPBL trend) exit when a PB starts. The immediately reverse and short for a small scalp then immediately go long on resumption north of the SPBL trend thus capturing down moves (even though they are small) and larger moves as price heads back north. That is jumping in and out. Only a very experienced trader can pull this off. He has to be very nimble and flexible. Believe it or not that fifth way is the most profitable way to trade this, if one is good at price reading. Mathematically jumping in and out will produce more than 20 points. Of course, more commissions too but brokers got eat also. Even after commissions more diero will be made than holding one position for 20 points. Somedays one just doesn't want to do this so he may just take a position and hold. OK let the naysayers come and scream "hindsight". Sorry but I cannot really show these things on a future chart that doesn't yet exist! Maybe folks will understand a bit why there are 4 Brooks books plus a course plus an encyclopedia of setups. Below is one MTR. There are many and none are exactly the same. Many variations of MTRs. The basic fundamental idea is the same across the board but how it evolves live can differ greatly. I really and truly am not a shill for Brooks but the man knows his stuff and he is the most thorough PA teacher that I know of. Like he says "I am teaching you "how" to play the violin, but it is up to you to put the work in" Most traders will not do the work and they end up trashing him. That is their problem IMO, not mine and certainly not Brooks.
Absolutely FANTASTIC post! Each question is short but soo important Thank you volpri. Your knowledge and dedication to teaching is unrivaled. I've said it before and I'll say it again. @Baron, this one should be on the hall of fame list
I think its been close to 10 years since a thread was added to this list. Congrats @volpri , you made it!
Aloha volpri, I'm wondering where your 0%, 50%, and 100% lines are coming from. What anchor points did you used to place them? Mahalo!
They, (the percentage numbers) mean nothing other than I am just using a price retracement tool in Sierra Chart (one of the platforms I use) as a way to draw MMs. Usually there is more than one MM can be drawn on a move.
You're awesome. Except you cannot catalog much. Don't you have a wife who can help you with these details? Why is his thread at the BOTTOM of the list, and why are there no dates in that list? You have threads with random date order all willy-nilly! You are a terrible forum housekeeper. Sorry man, but someone had to say it. *LOUD SNIFF*