When the prior day has formed a strong signal bar on the daily chart, the next day can often be a large trend day. A large trend day can often be held for a swing till the end of the day.
Signs of a strong trend:
- Strong close prior day (b81)
- Large gap, no selling (b1, b3,5)
- Strong breakout from opening range (b8-10)
- 20 bars or more before reaching ema (b33)
- Multiple A2 and fL2 (b47,54,62,75)
- Small moves off counter-trend signals (b22,28,33,64)
- Sideways pullbacks (b43-47, b51-54,b61-65)
- failed W (possibly W42,50,59)
On a very strong day, its acceptable to trade overlapped signal bars and doji signal bars as long as they are with-trend.
Hi Cad,
ReplyDeleteI noticed the strong trend early on, and I did expect a second leg up after bar 11, but it obviously didn't happen until way later when it had first taken out b/e stops off that initial fL2. So all in all very difficult to make money even if you get the analysis right today. Pretty rare that we don't get a second leg up in the early part I believe...?
Thanks man!
Yes, its rare for a strong trend not to attempt a second leg in the early part of the day.
DeleteHi Trader33, you could have bought anytime during the spike from b8-10 and have your stop below b8 expecting a measured move of the bodies of the spike (reached at b67 or b68).
DeleteAl talks and writes a lot about it. Read the new book about trading ranges.
Hi cadaver,
ReplyDeletedo you mind you could write article about how count L1/L2, H1/H2?
I marked b5 as fL2 or shoud I wait for bar b6? Anyway I wasnt so shure because b3 nor b6 didnt extend below previous bar.
After it I marked b11 as L1 an b13 as L2. After it I marked b15 as L1 and b16 as H1 or should I reset the count due to b16 outsidebar? Then I marked b19 as L2, b23 as H2 and after b27 close I marked it as fH2 but after b33 and didnt knew what next... If I expected some deep PB at the moment I were completely lost. I marked b39 as G2 but I didnt knew exactly what happened before b11-b33.
Thank you very much for your reply.
You are right on most counts. b3 and b5 had lower highs and lower close so they were L1 and L2.
Deleteb15 was an L3. It completed three tiny pushes down and gave two legs up. b27 was certainly an fH2 and if it did not have a tiny bar, it could be shorted.
I'll post about complex pullbacks one of these days.
Hi Cad,
DeleteWhen do you reset a leg count?
I understand that the leg count gets reset every new trend push either side, but what counts as a new trend push vs. just a pullback in a correction.
For example: In the link below I count b11 as an L3, but you marked it is an L1, what was your reason for resetting the leg count?
http://ninetrans.blogspot.com/2011/03/correctly-trading-soft-trend.html
thanks for your help,
Manuel
technically, it was an L3, I was illustrating repeating sequences of 2 small pushes below prior bar on soft-trend days.
Deletethanks Cad for your answer. Can you please define what counts as a new trend push that resets a leg count? that will clear up a lot of confusion for me.
DeleteFor instance, I don't understand what made b27 a fH2? I am counting it as an H4. Since the move to b19 can't be a new trend push, so how did the count get reset.
thanks for your time,
Manuel
If b3 had same high as b2 could be still counted as L1?
DeleteThank you very much for your reply.
Carmen, b3 is a Low 1 variant because it had a LH & LC, so no.
DeleteRead this post where Cad talks about this variant: http://ninetrans.blogspot.com/2012/02/a2-variants-on-small-bar-days.html
You are correct manuel.
DeleteCad,
DeleteIf you read this, can you please tell me why b27 is a fH2 and not an H4?
thanks a lot for your time,
Manuel
Manuel, thank you very much for reply.
DeleteIf I can help you, I think that b18 is not H2, because did not extend above b16 and then you count from b23 as H1 and b26 as H2.
cadaver, Manuel, could you tell me why in post "Correctly trading a soft trend" (the Manuels first link) isnt count reset after outside bar b7?
But most H2s don't go above H1, and i don't understand why b23 became H1 either? So I am still confused about the fH2 on b27.
DeleteCarmen, I think the answer to your question is that outside bars only reset count when the bars that make up the leg are overlapping.
My suggestion is to stop counting Hs and Ls and look at pullbacks as sequences of 2 or 3 leg moves. So b11-19 is a leg down, embedded within it is a small leg up b15-18, followed by 2 legs to b27 and two or three legs down to b37.
Deletethanks for the suggestion Cad
Delete