Futures I Trade Show & Brooks Book

[ACS 10]

I have a question which is marked in the chart.

Thanks for any replies.

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.

[albrooks 10]

you could short the L2 but it followed an outside up bar and i prefer to wait for 2 legs AFTER the surge up from that bar ended (it ended on the next bar). also, BW = I prefer to wait until someone is clearly trapped, and when the BW is below the EMA (here it is AT the EMA rather than below; is anything, it is slightly above but this is now a bear trend), the odds are that it will break to the downside so i prefer to wait to see if some bulls get trapped, and they did, on the failed H2 above the EMA. remember, the mkt broke a TL and a TCL and reversed, and formed a LH. this move up was a second attempt to reverse the new bear and it formed a DT bear flag. the mkt was now in a bear trend until it proves otherwise so i was focusing on opportunities for swings on the short side.

[thetatrader1520887476 10]

Al, Thanks for the book and all the I trade shows. Its great to see your posts in here. I think it will help a lot of us out.

[trader5 10]

the move to 930 was a two legged sideways move that had 2 smaller 2 legged moves in it. as the move traveled sideways, it broke the trendline from yesterday and this move became a large possible Final Flag, so I was looking for reasons for the trend to turn down. The false BO of the top of the channel was perfect and the trend was then down from there unless something else developed, which it did not.

 

 

tcl trend channel line

bw barb wire

dt double top (bear flag)...the Lower High was in the form of a Double Top Bear Flag

 

Is the tcl following the final flag also a 3rd push up? I have marked what I see as 3 possible legs up in the attachment.

[Mr_black 10]

5 good opportunities from Friday's price action

[forrestang 10]

5 good opportunities from Friday's price action

 

You are talking about these correct?

[forrestang 10]

Here is another question for Al or anyone else with some insight, as this is material from the first 50 pages of the book.

 

On the chart in the picture, bar 4 was said to NOT be a good signal bar for a short. But, it does seem to come right up to the MAJOR trendline, and it is a pretty decent reversal bar(ok sized tail, shaved bottom so it was sold right into the close).

 

It is also the second leg up from a low of the day reversal. So there seems to be a confluence of events that would make this a reasonable short setup, other than it being an L1?

[rigel 10]

If you Study Chapter 4 on Pullbacks, especially as of p118, a significant trendline break is required prior to such trades, hence if a bull trendline was broken and then there was a pullback forming L1 and L2, that would be a good short, and more so if below EMA.

This section also clarifies the confusion on H1, H2, H3, H4, L1, L2, L3,L4 .

 

Think that is a typo error on page 120, "Likewise a Low1(L1) occcurs in an down or sideways market", think it should be "an up or sideways market"

 

Up obviously means a retracement up after downbars which break a bull trend.

 

Perhaps Al can clarify this.

[Gabe2004 10]

Here is another question for Al or anyone else with some insight, as this is material from the first 50 pages of the book.

 

On the chart in the picture, bar 4 was said to NOT be a good signal bar for a short. But, it does seem to come right up to the MAJOR trendline, and it is a pretty decent reversal bar(ok sized tail, shaved bottom so it was sold right into the close).

 

It is also the second leg up from a low of the day reversal. So there seems to be a confluence of events that would make this a reasonable short setup, other than it being an L1?

 

I would not have shorted below bar 4 because there was a strong move up and usually there would be at least 1 pause and then resumpsion of the trend for at least 1 more leg up.

Also, price is above the 20 EMA but I am not a big fan of the EMA as it will take you clost to 2 hours from the open to get a valid EMA reading. Especially on big gap days.

Edited June 14, 2009 by Gabe2004

[rigel 10]

That is why in Chapter 11 "The First Hour", it is emphasized that price action is more important than patterns against EMA in the initial opening period.

[djohnsonhot 10]

I would not have shorted below bar 4 because there was a strong move up and usually there would be at least 1 pause and then resumpsion of the trend for at least 1 more leg up.

Also, price is above the 20 EMA but I am not a big fan of the EMA as it will take you clost to 2 hours from the open to get a valid EMA reading. Especially on big gap days.

 

Hi, I am new to this forum. There is a ZEROLAG TEMA and HATEma (Heikan-Ashi)...that I used on Ninja that seems to respond quite well to quick direction changes and roll-overs. I also use a 22 Period TEMA on my charts.

 

I look for a ZERO lag Cross over using 34 periods for the two TEMA's mentioned above (Zero Lag)...and use the 22 period TEMA as a marker as well. The steeper the cross over (TEMA is Blue, HATema is Red) with the Blue tema crossing up or down SHARPLY, the better the trend change on a 5 minute chart.

 

I have been employing Al's rather simple but effective MICRO-trendlines with good success...but, my impatience level has cost me quite a bit of money and some losing days. As Al mentions, there SHOULD be less than 10 perfect set-ups in a Day session of the EMini (ES)......

 

This Brook's stuff is good. Apparently I need to read Wycoff..

[ACS 10]

Here is another question for Al or anyone else with some insight, as this is material from the first 50 pages of the book.

 

On the chart in the picture, bar 4 was said to NOT be a good signal bar for a short. But, it does seem to come right up to the MAJOR trendline, and it is a pretty decent reversal bar(ok sized tail, shaved bottom so it was sold right into the close).

 

It is also the second leg up from a low of the day reversal. So there seems to be a confluence of events that would make this a reasonable short setup, other than it being an L1?

 

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.

[trader5 10]

the move to 930 was a two legged sideways move that had 2 smaller 2 legged moves in it. as the move traveled sideways, it broke the trendline from yesterday and this move became a large possible Final Flag, so I was looking for reasons for the trend to turn down. The false BO of the top of the channel was perfect and the trend was then down from there unless something else developed, which it did not.

 

 

tcl trend channel line

bw barb wire

dt double top (bear flag)...the Lower High was in the form of a Double Top Bear Flag

 

Here is another question for Al or anyone else with some insight, as this is material from the first 50 pages of the book.

 

On the chart in the picture, bar 4 was said to NOT be a good signal bar for a short. But, it does seem to come right up to the MAJOR trendline, and it is a pretty decent reversal bar(ok sized tail, shaved bottom so it was sold right into the close).

 

It is also the second leg up from a low of the day reversal. So there seems to be a confluence of events that would make this a reasonable short setup, other than it being an L1?

 

It wouldn't be reasonable to short there because it followed 11 bull bars in a row - one would want to see some more demonstrated strength to the downside, such as at least a 2nd failure to break the trend line and a break of the trend line between bar 3 and the 11:30 bar. Traders who took that L1 short were trapped and helped the move surge higher in bar 5.

Somewhere in the book, Mr. Brooks mentions not taking an Lx short entry if it follows 4 bull bars in a row.

[ACS 10]

If you Study Chapter 4 on Pullbacks, especially as of p118, a significant trendline break is required prior to such trades, hence if a bull trendline was broken and then there was a pullback forming L1 and L2, that would be a good short, and more so if below EMA.

This section also clarifies the confusion on H1, H2, H3, H4, L1, L2, L3,L4 .

 

Think that is a typo error on page 120, "Likewise a Low1(L1) occcurs in an down or sideways market", think it should be "an up or sideways market"

 

Up obviously means a retracement up after downbars which break a bull trend.

 

Perhaps Al can clarify this.

 

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.

[rigel 10]

Then we have a problem:

 

If you look at the para before the quote on p120,

 

"H1 occurs in a down or sideways leg .........................................."

 

Then : "Likewise a Low1(L1) occurs in an down or sideways market"

 

Has to be "an up" not "an down" grammer:)))

 

H1 is in a downleg of a bull trend

L1 is in an upleg of a bear trend.

ie. both should occur on retracements for ideal long and short respectively.

 

Am sure Al brooks can clarify.

[ACS 10]

Then we have a problem:

 

If you look at the para before the quote on p120,

 

"H1 occurs in a down or sideways leg .........................................."

 

.

 

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.

[forrestang 10]

To clarify, that short I posted is not one that I would personally take, mainly because there was too much of a move up, to consider a short there.

 

And in the book, it's stated over and over, that you want to see a TL break then a retest of the extreme. I think I look for this all the time during real time trading before considering reversals.

 

But there are a lot of reversal examples shown that don't seem to meet this criterion.

[rigel 10]

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.

 

Read the full post again:

 

H1 is in a downleg of a bull trend

L1 is in an upleg of a bear trend.

ie. both should occur on retracements for ideal long and short respectively.

 

If that is not clear enough, go to page 128:

 

"The pullback usually forms a High 2 pullback in a Bull or a Low 2 in a Bear (an ABC correction)"

 

HENCE L1 OCCURS IN AN UP OR SIDEWAYS(ABC CORRRECTION, RETRACEMENT) MARKET IN A BEAR TREND AS AN IDEAL SHORT SETUP Based on this there is a typo error, why not let Al brooks comment on this.

[djohnsonhot 10]

Good call, ACS...I was about the post the same reply. Based on Al's other articles, and from another forum called Sanuk (Google groups) one must be constantly diligent to recognize when a prior trendline has become irrelevant to the current Price Action.

 

Oh, and I am surprised that there was not another T-Line drawn from the bottom at Candle three to Candle 5. The two candles prior to 5, at approx 11:28 to 11:30 bounce off this T-LINE.

 

DJ

[ACS 10]

Read the full post again:

 

H1 is in a downleg of a bull trend

L1 is in an upleg of a bear trend.

ie. both should occur on retracements for ideal long and short respectively.

 

If that is not clear enough, go to page 128:

 

"The pullback usually forms a High 2 pullback in a Bull or a Low 2 in a Bear (an ABC correction)"

 

HENCE L1 OCCURS IN AN UP OR SIDEWAYS(ABC CORRRECTION, RETRACEMENT) MARKET IN A BEAR TREND AS AN IDEAL SHORT SETUP Based on this there is a typo error, why not let Al brooks comment on this.

 

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!

[ACS 10]

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.

[forrestang 10]

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.

 

Monday was a rough trading day for sure. No real follow through anywhere. I did not catch that 10:30 trade.

 

I kept seeing what I thought was going to be a reversal later in the day that never materialized (3 Pushes, TL break, retest of extreme). Everything was there, it just didn't happen.

 

I did ok for the amount of chop though.

[BlowFish 10]

Wow, this thread got quiet in a hurry! .......

 

Depends on your perspective. I took a couple of days off as I frequently do and thought it had got rather busy in my absence!

[forrestang 10]

Observations on the day.

 

---EDIT---

That L2 at 10:45CST below the EMA was probably the best trade of the day after the breakout from that wedge?

Edited June 16, 2009 by forrestang

[ACS 10]

Observations on the day.

 

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?