Three pushes in the same direction should not be automatically labelled a wedge. All three pushes do is to terminate a leg. After termination, the move could continue after a pullback or move in a horizontal trading range until a fresh breakout.
For example the channel from b2 resulted in three small pushes (b5,7,11), which resulted in a termination of the leg. The micro-wedge (b13-15) terminated the counter-trend leg.
The weak wedge (b26,29,34) terminated the second leg of the full move down from b2 and the price moved horizontally in a trading range for several bars.
The key takeaway here is that none of these three pushes were automatically tradable. the channel to b11 continued after the pullback to b24. The mW to b15 continued backup after a two bar move and the mW or small W to b34 simply terminated the trend without any clear direction.
A wedge needs to be very strong and end with a clear reversal bar for a high probability reversal trade. Even then, most traders are better off entering on the first pullback after the W reversal (W1P). If you are in the old direction, You should consider exiting on the third push near the TCL (b11). or you could wait for the bar to close and exit on its close if the bar has a strong close (b34).
I get it now. Thanks. By the way in case you havent checked out any of Als books they are really good but written as only Al can write.
ReplyDeleteBetter than the first book at least. Very curious to see if you were able to do anything with todays action. I found it impossible.