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Dear All,
It is the original slide from AL's course. AL is saying it is a small 2nd leg trap.
Is it right to buy H2 at the bottom of a channel and expect the target at the other end of the channel. If it goes wrong as happened here what makes us think it is going wrong so we should exit from trade. Or, alternatively, we should stick to our SL.
Regards
Hi Harpreet,
Yes it's ok to buy H2s at bottom of channel and expect a move up as long as trader's equation is reasonable (gives >1:2 swing and doesn't go above the TCL). But some hints that something was wrong for the bulls was that already we had 1,2,3 big pushes (wedge) and notice how the big 3rd push couldn't reach TCL and formed a big DT instead. This is a weakness by the bulls. It doesn't mean bear trend, but reduces chances of being able to get back there again. There's also a concept that if a push can't reach the TCL by X amount of points, it increases chance that it may break TL by same X amount of points.
The smaller 1,2 Al also calls 2nd leg trap. It doesn't mean it wasn't ok to buy originally. But it becomes suspicious when a strong 2nd leg can't go above prior swing high. If bulls make that many bull bars, but can't go above a high then maybe this is a small TR, in which case the H2 buy was actually too high. But you can't know it until you see the bull failures, after which hopefully you can get out BE or with small loss when strong cc bears begin to appear. Remember, most swings end with either small win or small loss since many don't have strong BO after entry.
Hope this helps,
CH
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Thank you Mr. Carpet.
Always appreciate your inputs.
😊
