Video 09B: Pullbacks and Bar Counting
Last updated
Last updated
All double tops (DT) are Low 2 sell setups
But don't sell, unless the context makes sense.
All wedge tops and wedge bear flags are Low 3 sell setups
All Double Bottoms are High 2 buy setups
Don't enter unless context is good
All Wedge Bottoms and Wedge Bull Flags are High 3 buy setups
Here is a bull trend. and followed by a strong bull break out.
The blue wedge is in a tight trading range. The minor bear reversal in a major broad bull trend, the probability of reversal is quite low.
Here is a bull double bottom bull flag, in a weak bull trend.
The double bottom's 2nd leg is slightly lower than the prior leg down.
The stop is always at the bottom of the weak bull trend.
There is a bear double top, with a weak rally.
The 2nd leg up is slightly lower than the prior leg up.
Use Measure Move to measure the potential take profit price.
Usually use the lower top' Measure Move.
Once the price gets lower than the lower top's Measure Move, then use the Double Top's higher top.
Sometimes the rally is very strong. The 2nd top is still below the higher top.
But it is not higher than the higher top, it still a double top bear flag.
So it is still on a Broad Bear Channel. Bears will look to sell the bear bar.
Traders can sell below the Bear Bar.
If the bull leg is "always in long", the probability is we are going side ways.
However, there are 40% chance to go down to the neckline.
40% chance will fall swing down to a Measure Move down.
In a bull trend, we call it double bottom flag.
In a bear trend, we call it double bottom reversal.
In a bull trend, it is a bear double top reversal.
In a bear trend, it is a bear double top flag.
Either Flag or Reversal, we trade the same way.
Here is a clear bear trend, with a double top
Traders can sell below the lower bear bar, betting the bear trend resumption down.
The Strong Bull bar doesn't have a good follow through.
It forms a expanding triangle.
It is also a 3 pushes up.
The pullback is not strong.
Bears sell down, bulls buy up. Not consecutively bull/bear. But it is still a tight bear channel, so Buyers not going to enter here. (3 pushes down)
You'd better to wait for the 2nd leg down, a double bottom, for the reversal up.
Sometime in a clear bull trend, you see a double top, but the bear trend is not clear yet, it doesn't matter, you trade as a Double Top reversal or Double Top bear flag. Do the same.
When the Bear Trend becomes clear, you see a double top, you can call it DT Bear Flag, but it doesn't matter, you a always look to short.
There is a 3 push bull wedge, but it fails with a 2 bear bar collapse
So we expect there will be at least 60% another small leg down.
After the 2nd leg down, we expect a 2nd leg up, the chances of two legs up are higher.
This is a very high probability buy setup.
The 1st buy reversal up is low probability buy, because the pullback trend is very strong. It probably lead to a sideways, or a trading range.
The 2nd buy reversal up is high probability buy. Because after the 2nd leg down, a 2nd leg up is high probability.
After the Bear Break out, some traders recount from H1, some traders continue counting H3.
It doesn't matter.
The key here is, the market is attempting to go up.
1st attempt failed, after H2.
2nd attempt H2, having a double bottom will go 2nd leg up. This will have a higher probability.
The key point here is, two legs up, the 2nd leg, usually goes to sideways.
In a strong bear trend, you should never look to buy setups.
Bear Trends are always forming wedge bottoms.
The reversal rally is low probability to buy reversal.
But it is good for bears to setup a selling opportunity.
Remember, 80% of reversals in strong trends fail.
It doesn't matter Bulls count until low 5 or low 6, some other Bulls count low 2 and start again.
The key point is the Bears has a reasonable top, at least for a pullback or a trading range.
Instad, if the Bulls break out again, then we might have another couple legs up and another reasonable tops. Chances are you might get a couple of legs down further
The strong Bull Breakout above the 3 pushes wedge, chances are, it will lead to a 2 legs up, or even 3 legs up.
The key point here is you are going to have more legs up. Doesn't matter how you count L5, L6 or L1, L2.
Because there are a lot consecutive tops, either 3 legs up, then 3 legs up, or you call it 6 legs up. There will be higher probability that, you probably will see a couple of more legs down.
1st is a reasonable short, but not a high probability short.
2nd is a high probability short.
If L1, L2 failed, (there is a bull breakout), then probably at least another 2 legs up (L1, L2 again).
Because the Bull Channel is so tight, so the higher probability after another 2 legs up, will probably lead to a Trading Range.
The Double Top with a Lower High context is good for Bears. So some bears might sell after the bear bar, betting Bear Reversal.
The key point is the L1, L2 followed by a strong Bull Breakout. So it will probably another legs up.
The L4 (you can count again as L2) is 2nd Attempt to reverse, so it has higher probability to reverse.
50% chance the breakout will success, 50% chance the breakout will fail.
But here, L4 is not a good looking breakout, so it will be 60% sideways or reversing down.
The pullback are very tiny bars. You can not sell at tops, expecting to sell at top.
In Strong Bull Trend, do NOT looking for sell at L1, L2, L3, L4 ...
Instead, you should always look to Buy H1, H2, H3 ...
When it comes to a Trading Range in the blue zone, you trade as trading range. Now:
you can buy low
you can sell high
you can scalp
Complex corrections (e.g. L4, or L2 + L2 etc...) in low time frame. Usually became a simple L2.
