After a breakout in a direction, there is usually an attempt by the traders in the opposite direction to make a stand. This could result in a reversal bar, an inside bar or a small bar depending on the strength of the traders trying to fade the breakout.
A reversal bar after breakout usually implies a failure of the breakout and the failure is a decent with-trend signal by itself but is enhanced by being near a barrier such as ema (b59) or near a trendline (b36) or being a breakout test and so on.
A trend bar, especially a small trend bar after a breakout (b18) represents success of the breakout and may be entered with-trend if the bar size is small enough to represent moderate risk (around 2 points for normal day).
An inside bar after a breakout (b39, b51,b74,b76) represents a pullback and a possible failure and can be bracketed to trade either way. If both the breakout bar and the inside bar are bearish, its generally a good idea to take the trade only with-trend. If the inside bar after a bear bar is the bullish, it can be bracketed.
What does bracketed mean?
ReplyDeleteBracketing is having stop orders 1t above and below a bar to enter on either side on breakout.
ReplyDeleteAnother good post.
ReplyDeleteb1 is trend from 1st bar long. Is this something you take all the time or skip sometimes as I have seen in some of your charts you take and some charts you don't. Curious on what scenarios you decide not to take?
1 Rev you marked in the chart, that would be bar 5 right which is a loser. I see you marked b7 as 1 Rev.
Was there a reason you skipped taking both the 1Rev as well as the 1PB (both high probability trades)?
Thx,
B
Buster, I rarely short below bull bars. The first short signal is correctly marked 1Rev
ReplyDelete