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On this slide Al said the original Leg 2 (in Green) wasn't reached, but then the redrawn Leg 2 (in Gold) were reached approximately and that's good enough, as traders see different things.
What I think was also happening is that a lot of traders did take profits just before the original Leg 2 (Green) hence the strong bear bar. And that the 8-bar rally that took us out of the TR was a Leg 1.
Why isn't that a better reading of that chart?
Thank you!!
Hi Noah,
That's a good observation about profit takers before reaching MM of leg 2. In TRs there's often disappointment both ways and one way it manifests is by MMs often not reaching by a few ticks or a few points.
I think the essence of that slide is what Al said towards the end "Did the 2nd leg end here or here? Doesn't matter, I'm just looking for reasons to take profits and reasons to scalp in the other direction."
I think the whole slide is a lesson in seeing strength vs weakness and how early can you spot it. For example, every single BO above prior swing highs had bad FT and retraced deeply at least for a scalp (some may have needed scaling in). But the idea is to catch this early and realize that bears are there at the highs and making money so probably this is not a strong move by the bulls so better take profits early and maybe even consider selling for scalps if advanced.
Hope this helps,
CH
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