Monday, November 7, 2011

Three push legs


Three pushes with small pullbacks between them as in b8,15,18 or b57,60,69 may act like a poor Wedge. This wedge will basically act as a single leg and is likely to give a pullback and then resume the original move, taking out the prior leg extreme.

For example, the three push leg down to b18 gave another leg down to b24 before giving a two legged move to ema, as did the leg up to b69.

A three push leg to ema or other barrier may give rise to a deep pullback or even reversal, especially at the beginning of the day. On the other hand a three push leg in the direction of the ema slope may give a pullback thats stopped at the ema as it did today.

Trading such a leg is simple. If the leg stopped at a barrier, take the reversal if the signal is decent. If not, wait for a pullback and continuation for at least another leg.

6 comments:

  1. HI Cad,
    as first congratulations for your blog. I'm writing from Italy and I always follow your posts.

    Today I bought 1 tick above b8 assuming it was the end of the 1PB in the trend move from b1 to b6. I did not consider b6 as 1REV. Could you please help me understand my mistake? Why are b6-b7 the 1Rev instead of a PB to the EMA. b1 was also a confirmation to me since it was a good bull trend bar.

    Another question if you don't mind. I frequently read in your posts that you use a 6t stop-loss. Is this something you eventually change based on the context? And how do you move it during the trade? Is it correct to move it to break-even as soon as the 2pts scalp target is achieved?

    many thanks!

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  2. franc,

    b5,6 broke above HOY and reversed. This is a common 1Rev.

    If there is anything that looks like it could be a reversal of the prior move, you should no longer take 1PB in the direction of the original move unless the bar is very strong. b8 was weak, bordering on a doji. Even if you do take a 1PB, on its failure (b9) you should always consider a possible 1PB in the reverse direction.

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  3. Hi Cad, b4 RVB and b5/6 2BR overlapping. Does it make sense to loosen the criteria for overlap if we are at an extreme of the day, or let's say at an extreme of the last X bars?

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  4. There was overlap at b37/38 too but not as much as at the first example. It was also the second attempt to reverse.
    What about the doji at b36? Does it weaken the following 2BR?

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  5. "loosen the criteria for overlap" - I mean tolerate some overlap

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  6. doji does weaken the reversal setup, but weighed against the opposing factors of being a breakout of consolidation, W, TCL OS, the buy comes out ahead. But you can safely wait and take the next HL if you are a cautious trader.

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