The support forum is built with (1) General and FAQ forums for common trading queries received from aspiring and experienced traders, and (2) forums for course video topics. How to Trade Price Action and How to Trade Forex Price Action videos are consolidated into common forums.
Brooks Trading Course social media communities
Thank you Karim, why would you be getting out below a bull or doji when shorting from the top of the channel? To avoid potential DB?
@basileusbasileus-net
if you sell, you will be selling at the top third of the channel (L1 or L2), since price is in a channel/TR, you take profit at the bottom third, once the price goes to the bottom third, you will start looking for reasons to take your profit, Doji or Bull bar at the bottom range is a logical place to do so.
Opposite goes if u buy at the previous low, u look for reason to take your profit at the upper third, getting out below a bear bar or doji at the top third is a logical place to do so
@basileusbasileus-net
1) It is a nice BO, correct, but the follow through bars went below the 20EMA, this should make u suspicious that the bull trend is weak and it will probably transition into a Trading range or a bear trend.
You may use the 20EMA as a guide on how strong is the bull or bear trend, in your chart, its clearly balanced, Price keep going up and down below the EMA, Therefore; you should change the way you trade and think accordingly, meaning BLSHS and use wide stops.
2-3-4) failed strong continuation means there is a good chance its a LH MTR setup, Remember, bull trend dont just turn into a bear trend, there is a transition phase which is what u see (Broad channel) followed the bull breakout, you can choose to wait and sell at the top of the channel or you can buy previous lows betting the breakout will fail.
7,8,9,10 are 2 bull legs in a trading range (channel), usually, when u see a strong reversal, its followed up with a 2nd leg, the top of the second leg (bar 10) is at the top of the channel.
In order to get an idea where is the top of the channel, you draw a line between points (5,7) and copy that to the top of the channel (bar 6), this gives u an idea on where the 2nd leg might reverse, once u see 2nd leg and a reactions at the trend line, this is a good short setup and u take your profits at the bottom third of the channel
@basileusbasileus-net
Adding one more note,
You should pay close attention to the last 20 bars, and try to make sense of where is the price in the market cycle, if you cant, look at the last 30 bars, if you cant, look at the last 40 bars, etc.. in any case, you shouldnt have more than 100 bars infront of u on the screen.
If you are confused, it means u r in a trading range, you just need to figure out what type of trading range is it (triangle, channel, wedge, etc...), looking at the most recent bars give u clues, then u can decide on how to do u want to enter (reversal up or reversal down or wait for a breakout from the range)
does that answer your question?
The last note of Karim is spot on, you need to know first if TR PA or trending behavior (if so, spike or channel? if channel, broad or tight?).
At 5 BUBD so TR, 6 and 7 is a tight channel from 4-5 spike so you expect 6 to be tested, but not much more because the first reversal from a tight channel is usually minor. On the way up, because the MKT can start trending at any time, you need to evaluate the behavior again.
The bull SB at 7 is bad, then the bulls tried to change the behavior to trending with 2 strong bull bars but, again, bad FT on EMA breakout. At 9 ioi but tail, you can take the scalp for a second leg up but you can't buy the BO above 8 because there will be sellers above everything (6, 8, at the trend line). Why? Because the TR PA is still present and look what the MKT did around 8 during the 5-6 PB, it repeteadly sold-off. So above 8, only look to sell or wait for PBs to buy.
I started and end up as Karim: does that answer your question? 🙂
Understood, thank you very much!
Thank you very much Karim, this is the answer I was looking for! Will start with the latest 20 bars and go from there.
My issue is that prior to that I was either looking at too little bars or too many. This will help me to keep the focus in the right spot! Thank you!
@ludopuig, thank you for your reply! That is the most important point you raise, knowing what market conditions are you in. The issue for me was always how far back should I be looking. @ point 10 I could be looking at big range 1-2 and trade it of a bull channel 9-10. Karim's point about looking at the last 20 bars cleared it up for me.
Thank you
PS. Few more questions in regards to your comments:
1) Why bad FT on EMA BO? First bull bar touched EMA, second closed well above it so how is it bad?
2) Wonder why do you see 4-5 as spike? It it a spike on higher TF but there was a doji bar in the middle (at EMA) so technically the spike ended there, in the middle between 4-5?
Thank you!
1) Why bad FT on EMA BO? First bull bar touched EMA, second closed well above it so how is it bad?
The second bull bar is breaking out the EMA so the next bar, a bear doji, is the FT. After a bad SB at 7, bulls needed one more bull bar to convince traders and they failed, this is TR PA.
2) Wonder why do you see 4-5 as spike? It it a spike on higher TF but there was a doji bar in the middle (at EMA) so technically the spike ended there, in the middle between 4-5?
The spike is actually composed of 3 legs (4, doji, 5), so it is actually a parabolic wedge in a microchannel. Therefore the first reversal up will be minor and you need to be ready to sell at the EMA or 50% PB for the said second leg down, here it was a bear channel to test of the low of the TR (1).
Dear All,
Please note I have moved this topic thread from the Q&A section to here.
The topic is Trends rather than 'How to Learn Price Action'.
