ACS

This is where it gets confusing for me. What about the break of the bull trendline from yesterday? Is this morning's rally a test of that extreme? This whole month seems like an unending series of trendline breaks and tests of extremes that is getting hard to keep track of.

These are the notes I made while reading the book: Notes on Reading Price Charts Bar By Bar Number one question: is the market trending or not? Watch what happens when price moves beyond prior bars or trendlines. A beginning trader should not trade if the market is in the middle of the day and in the middle of the day’s range. A very large bar with small or no tails after a protracted move or breakout can represent exhaustion and no trade should be taken until more price action unfolds. A beginning trader should only enter a trade when the signal bar is also a trend bar in the direction of the trade. If the market tries to do something twice and fails both times, expect it to do the opposite and likely succeed. The best reversal bars have an open near or just beyond the close of the prior bar, a close just beyond the close of the prior bar, a tail that is 1/3 to ½ of the bar, and not much overlap with the prior bars. Countertrend, wait for a trendline to be broken and a strong reversal bar on the test of the extreme, then enter on a second entry. Do not take a second entry that lets you in at a better price than the first. The strength of the trendline break provides an indication of the strength of the move. The bigger and faster the countertrend move, the more likely a reversal will occur after a test of the extreme. On non trending days expect swing high/low breakouts to fail and create second entry countertrend trades. A break of a trendline creates a new leg. Any time there is a new trend or any capitulation of one side, there will usually be at least a two legged move. This can occur in a pullback in a trend, a breakout, a major reversal, or anytime that enough traders believe the move has sufficient strength to warrant a second attempt to test whether a trend will develop. Strong trends have big gap openings, trending swings, no climaxes and not many large bars, no significant trend channel overshoots, failed wedges, stay away from the EMA for hours, small pullbacks, sideways corrections, no two consecutive trend bar closes on the opposite side of the EMA, and bars with small or no tails. When a move has a series of trending swings watch the size as they progress to see which side is gaining strength. Any move that has two legs should be traded as a pullback, even if it is with trend. If the market is pulling back from a trend that ended in a climax like a trend channel overshoot and reversal or any other significant trend reversal pattern, the trend has changed and you should stop trading with the old trend and start looking for trades with the new trend. Types of pullbacks: H/L 1 lasting one or two bars, H/L 2 that breaks a minor trendline lasting three to five bars, pullback to the EMA, pullback beyond the EMA with EMA gap bar, pullback that breaks a major trendline then tests the extreme and has a two legged countertrend move. Once one type of pullback occurs stop trading the previous types. A sideways move that has a beginning and end spike that are near in price is a double bottom/top bull/bear flag. On strong trend days there is often a strong countertrend move between 2 and 2:30 NY time to shake traders out of their positions. Three push patterns can end a trend or a pullback of a strong trend. Do not trade breakouts in a sideways market. Wait for price action to confirm the breakout or reveal it to be a failure. Any time three or more consecutive bars mostly overlap and one or more is a doji stop trading and treat it like a trading range. A big move in one direction that is followed by one that retraces the entire move often means the market will move into a trading range. Trends that end with a trend channel overshoot usually have a test that does not exceed the prior extreme. Trends that end with a trendline break can exceed the extreme. The most reliable countertrend trade is to enter countertrend to a pullback in a trend. A strong break of a trendline will usually lead to at least a two legged pullback. Signs of strength in a trendline break: covers many points, goes well past the EMA, extends beyond the last swing pullback, lasts ten to twenty or more bars, prior trendline breaks, reversal to test extreme lacks momentum by having overlap or fails at the EMA or old trendline and does not get close to old extreme. Always have two reasons to enter a trade: reversal bar, good signal bar pattern, EMA pullback in a trend, breakout pullback, breakout test, H/L 2 or 4, failure of anything, any second entry. When a strong move ends in a three push pattern and then corrects with less momentum (shallower slope, smaller trend bars, more tails) the odds are high that the prior end of the three pushes will be exceeded soon. A tight trading range (largely overlapping bars) is like barb wire and acts like a magnet, drawing breakouts back towards its middle. Doji bars are one bar trading ranges. Never buy above one in a bear or sell below one in a bull. The best time to trade is the first 90 minutes and the easiest trades are failed breakouts and breakout pullbacks of patterns from the prior day. On a strong trend day trade every H/L 2 where the setup bar touches or penetrates the EMA. On a trading range day fade second entries at new highs and lows or wedges with strong reversal bars.

That was a big bear trendline broken this afternoon but does the shape of the decline from the double top at 913.75 argue for another push lower to create two legs down before we see at least two legs up?

Wow, this thread got quiet in a hurry! Anybody disagree that the best trade Monday was the L2 at 10:30. It was the only one I saw that went for the 4 points Dr. Brooks used in the "Month of Great Trades" presentation. After that it got tough for me; no trend and lots of barb wire.

I hope he comes back and participates in the discussion but I think we actually agree. Perhaps the book could be clearer on when he is talking about the overall trend or just a leg within that trend; that's where the problem seems to be. Good luck!

You didn't finish the sentence. "H1 occurs in a down or sideways leg of a bull move..." The "down or sideways leg" is the correction in that ongoing bull move. The overall trend is still up; the leg didn't change the trend, it only served as a correction within it. With that correction presumptively over, you begin looking for with trend entries again on Hs.

The book is correct. In a bear you are looking to get short at the resumption of the trend down after an upwards correction. That is exactly what the L1, L2, etc show. This implies the correction up was not strong enough to change the trend. When the trend is down you normally only count Ls until there is a confirmed or at least presumptive end to that trend. The exact opposite is true for Hs.

The trend line on that chart is no longer an active one. The line should now be drawn from the bar just after 2 to the bar right before 3. With the break of that line and more importantly, the trend channel overshoot at bar 3, the trend is now up, and up strong with all those bull bars. You should only be looking for longs until there is a solid trend change again.

I'm new at this but I'll give you my thinking. The bw and the fact that the signal bar was a bull trend bar would be enough to keep me out. Also, until the channel is broken you should assume it is still controlling the market and after hitting the bottom of the channel in a two legged move just before, the expectation would be an attempt to go to the top.

Did the ES just complete a two legged break of the bear trendline from yesterday and do we now look for a test of the extreme near today's low?

If you go to the Wiley website you can get a headstart by downloading chapter 1 to read while you wait for the book to arrive.

Late selloff yesterday broke bull trend. Today's open was test of extreme. Market sold off in a big two legged pattern to today's low which I agree was also a test of extreme after breaking morning bear trendline. Lots of barb wire between the 936 low and the market finally breaking below it 2 hours later. I didn't spot any really good beginner trades but did note the micro trend channel overshoot you marked L2 that triggered at 932.25 and went for 4+ points. There were several other trend trades but the signal bar was the wrong color or there was barb wire. The reversal bar at the day's low was a second entry but there was a lot of overlap with prior bars. Market needs to blast out of this range.

I was happy to catch my 11:26 scalp which looked like the best trade of the day to me. Seeing that change in trend in real time was more luck than skill since I usually spot them well after they happen. My goal for now is to follow the recommendations in chapter 15. Don't trade barb wire or if the market is in the middle of the day and in the middle of the day's range. On a strong trend day trade every H/L 2 where the setup bar touches or penetrates the EMA. On a trading range day fade second entries at new highs and lows or wedges with strong reversal bars.

Here's a real time test. The 10:30 rally broke the bear trendline from the open and then the market sold off in two legs to test the extreme. Will we now see at least a two legged rally up?

I noticed if you watch the December presentation you can right click on the slides and properties will give the url to download each of them but that doesn't work with the May lecture nor does the source code help. There are so many slides he zips past without comment, it would be great to be able to print them out. Anyone able to figure it out? p.s. nice entry short at 931.25 at 11:26. L2 second test of the EMA and the signal bar was a bear.

The bear trend bar you have marked L2 was the entry bar. The signal bar was the prior bull trend bar and the entry would have been one tick below the low of the signal bar at 929.25. This was not a beginner's trade because the signal bar was a bull instead of a bear and it was away from the EMA, but it was a win.

Is anyone able to either get the images from the May Al Brooks videos or figure out how to download them from the server. I tried to extract them from the swf file but my software said there were no images available. Many of them go bye so fast during the lecture that it's difficult to get anything from them. It would sure be nice to have them available to view at leisure. Many thanks to those responsible for the video downloads!

Something to keep in mind about the ACD system is how much electronic trading has changed most commodity markets. Round the clock electronic trading has eliminated the importance of the pit, NYBOT futures don't even have a pit anymore, making a specific opening time rather fuzzy in most physical commodities. The best example is gold. Gold was a New York hours market when the book came out and activity was concentrated between 8:20 and 13:30. That has changed and now gold is more a London hours market. If you wait for 8:20 you've missed half of the day and by 12:00 the market is starting to get quiet on most days. Does anyone know how Fisher's traders have adapted?

Does anyone here have the ability to record and post the Al Brooks lecture at the I-Trade Show by Futures magazine?