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.
HI Cad,
ReplyDeleteas 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!
franc,
ReplyDeleteb5,6 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.
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?
ReplyDeleteThere was overlap at b37/38 too but not as much as at the first example. It was also the second attempt to reverse.
ReplyDeleteWhat about the doji at b36? Does it weaken the following 2BR?
"loosen the criteria for overlap" - I mean tolerate some overlap
ReplyDeletedoji 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.
ReplyDelete