Tuesday, September 20, 2011

Early and late trend breaks

Early trend breaks are easier to spot correctly and the probability of them giving a sizeable trend move is high. Late trends are rather hard to predict and they will often go only a small distance or fail. This is why 1PB (b9) is a very vital setup to master. Catching the major portion of the early trend move allows you to relax and ignore the low probability setups during mid-day and optionally jump into any late trend break.

Late trend breaks are often very hard to spot and you will encounter may false starts such as the possible W at b40 or the second W at b55. The DP b22,46,49 was probably a decent signal, but the spike on b56 took out any swing stops.

The clearest and simplest entry for any trend break is a BP (b66). Even though it looks like the bottom of the range, a BP often is worth the risk given prior signals such as the failed W and the DP.

However, reading 1PB and OR are vastly easier than reading a breakout from an extended consolidation. If you cannot trade 1PB consistently, its unlikely you will be able to predict the BO from an extended TR consistently.


  1. Why would b6 be the 1pb in the bear trend from b1 to b5?

  2. JimJin, b8 is possibly a candidate for 1PB short, but once there is a second reversal, you should not look for a 1PB in the original direction

  3. Hi cad,
    - is RVB b9 to large to be a SB
    - RVB b22 followed a doji - isn´t it a weaker signal then (it obviously worked out)
    - the same with b73 were it didn´t work out
    - are b51/52 opp. twins although they don´t have
    "nearly identical highs and lows" (as Al puts it)

  4. b9 is a bit large, but for 1PB its normal to have poor bars. b22 is indeed a weaker signal and was followed by a deep pullback. b73 was possibly not a real signal bar (I need to edit the tolerances in the indicator)

    I have updated the indicator to write the signal type on top of the bar.