A Doubt

Sometimes Al wants two consecutive bars to start selling, others one, based on higher time frames contexts. The gap up this day was triggering a good signal bar in the daily so this could be a reason to need a second bar. For us, I think you can take it and exit at the H2 🙂

Slide 83 is very similar but there the H2 failed, at that moment the daily was pulling back... I took both H2s but at the time I didn't ask and I regret now to have the doubt still around!

Thanks for the explanation, I didn't think of that angle, I will check out the daily chart of the 2 days. BTW do you take into account the PA in the pre-market/globex session, does it give you a bias for the first few bars?

Appreciate your response 🙂

No, I don't use it other than to see where the H and L is. In hindsight, it could help but in real-time it is one more piece of information and I can't handle it, specially when many times there are conflicting signals. Following Al, I use the higher time frame charts and the prior days PA to evaluate what to expect. Al's blog is an unvaluable tool for learning so.

Alright.  Yeah his blog is a treasure trove of insights. Am currently going through the DSs, I intend to go through his past blog posts, it just feels so overwhelming, considering there are so many posts, but one step at a time I guess.

Hi Shubh

For the record, I trade the full 24 hour session and would certainly take the Globex into account when considering trades at the day session open. Trendlines from the Globex can often be important. In particular, from London open onward you can get significant price action that affects the day session. And the 8:30am ET news report can often be important.

Hi Richard, thanks for the input, I am keeping in mind the globex trendlines & S/R levels, It would take some time before I can see if it is making my trading better.

Another Doubt:

 The bull bar (that I have marked). Why is it not a good buy signal? I considered it a failed breakout below the wedge or a wedge buy signal bar (depending on how you draw the wedge) It was a good 2 bar bull reversal set up too, before that it was all TR price action and we were in the bottom part of the TR (TR since the beginning of the day session). It was almost a reversal up from what was nearly an 18 bar range. 

The only reason I can think of it not being a good buy signal bar (now that Al has not marked it a 'buy') is that it was in the upper part of immediate TR (the channel since bear BO), and it was just below EMA. 

In fact I held long even after the 2 bear bars 1 bar later, because they had tails, I only came out of the long under the bear bar which Al has marked as a sell. 

Are there any other reasons which I am missing that make it not a good buy, as I said I thought of those reasons only after I saw that Al has not marked them a good buy. 

So would appreciate any thoughts on:

-> Are my reasons for considering it a good buy, valid? what is wrong with those reasons?

-> What reasons am I missing for it not being marked as a good buy?

Any other thoughts on when the reasons that make it not a good buy trump over reasons making it a good buy. 

Thanks..

When strong bull bars around EMA are sold the bear channel case is strong (5-6 were the spike). Your signal bar was an OU which makes it weaker and next bull bar closing on high at EMA was sold, as the previous ones, so you should exit BE there.    

Bar 11 is similar, you may bought it but after 12 closing near high around EMA and 13 DT, everyone exited. 

It is not OU, but won't OU be stronger? 
Yeah I should have exited BE as

Posted by: @ludopuig

When strong bull bars around EMA are sold the bear channel case is strong.

makes sense. I guess I gave too much importance to the bull bar being strong and being a perfect 2 bar reversal and a wedge.

After 13 DT I did exit, in fact I argued that bears have now tried once more and failed so bull case is strong, and so I did not exit BE 🙂

Please can you explain more why OU (or body OU) is a weaken signal bar?

Yes, It was not an OU but still weaken the bull case because it made you buy very high in what could be a bear channel (The two previous strong bull bars at EMA, 7 and 12, were sold), so you had to be suspicious until the MKT clearly broke out the EMA (which would kill the bear case).

@ludopuig, Thanks!

If it is an OU with U bar closing near High, will that increase the % to buy even though the risk is higher?

As long as the MKT does not tell you the bear channel case is wrong, buying big bull bars below EMA is low probability (and big risk). I think 11, being a doji but having room to EMA, is a (scalp) buy but 15, even if it was a perfect OU, not so.

Now, would have had a perfect OU a higher probability than what we had? Because of the above, I don't care, I would not have taken it not matter what.