Open house session (November 1) recap by Louie Wong
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Transcript
We all know that if you have a pair of trend bars with at least one of them being big enough, there is a higher probability to see the trend from the open. Which is the case here, but sometimes it could also be a trap like here, huge bear bar, good follow through, but it turned out to be a bear trap and was reversed.
So what makes a difference? Why some succeeded and the others failed? And I think the answer is target.
Hi everyone. This is Louie. In this video, I’m going to recap Al’s live trading session on November 1st. And I want to talk mainly about when you have consecutive trend bars from the open, how do you tell whether it’s the beginning of a trend or it’s actually a trap? Right after the market opened, Al was pretty bullish and confident that we will have a bull trend from the open.
There’s a 70 percent chance that you’ll get at least two legs up, and a 70 percent chance you’ll get some kind of a measured move up. And when he saw the acceleration of bar 12, he basically made a conclusion that this is pretty much for today. So today’s probably not going to get much bigger, and therefore probably not going to go much higher.
Most likely we’re going to start to enter a trading range. We all know that if you have a pair of trend bars with at least one of them being big enough, There is a higher probability to see the trend from the open. Which is the case here, but sometimes it could also be a trap like here, huge bear bar, good follow through, but it turned out to be a bear trap and was reversed.
So what makes a difference? Why some succeeded in the others failed. And I think the answer is target. On November 1st, Bulls have a cluster of targets above here, and let’s take a look at where they are. This pair of big bear bars, the bears wanted the measure to move down, but anytime you have a big move like that, and you’re thinking about the measure move, you’ve got to think that the measure move can be in either direction.
So don’t just assume that the measure move has to be, um, down. It could be up. Those computers knew that this sell off could have an upside breakout and a measure move up. And yesterday’s high is a really important price. Very often, if there is important resistance, here we have, you know, a whole bunch of stuff all together.
Last week’s low, we got this measure move, the pink line. You’ve got the measure move the green line of the 60 minute moving average here. Yesterday’s high. Um, you have a whole bunch of resistance here and now we have a bigger bought our 12. the market reached up to grab that resistance. This will attract profit takers, the holes selling on the lawns.
So bulls are going to be pretty quick to get out. The first thing is yesterday’s high, which is also the open of yesterday. When you have this, the first bear bar, it has no upper tail at all. It’s usually a very strong magnet. For example, in this case, which is February 5th, 2024, this bear trend was reversed near bar 18 and the open was tested later in the day.
Here we have a trading range after consecutive sell climaxes. Try to test the open here, got very close. And eventually this open was tested on November 5th. So this is a very important target or magnet. Another target is the inverse measure move of these two huge bear bars. They are the largest bear bars late in the bear trend.
As soon as bar 79 went above the breakout point here, it also went above the low of bar 74. So gaps were closed, and this became an exhaustion gap. 60 percent of the time, the market will go at least a little bit above the top of this sell climax. And the market actually broke strongly above that. Bar 2 bull breakout.
And bar three is a follow through bar. It’s a doji, but it also has a bull body, which is one tick high. And it’s not a coincidence. The bulls tried really hard to make it an acceptable follow through to convince traders that they’re in control. And that’s why there are more buyers than sellers below its low.
Plus, the gaps are still open. The market did not go below this high and this high. So there’s gaps in between and more likely this is a measuring gap. While here, this became an exhaustion gap. This is a slide from video course 20A measure move. Whenever you see a strong breakout, there is a measure move target, but it can be in either direction.
In this case, 60 percent of the time there will be a measure move to the upside. However, the market reversed down strongly. And this is exactly what Al said in the video course. You will pay close attention here. At this potential support, he wants to see if the price can bounce from this support. Or the market totally ignored this potential support, so bear breakout, good follow through.
Then we’re going to the inverse measure move. Same thing here. There could be a resistance here. It’s also the top of this trading range. However, we broke strongly above that and we have good follow through and the gap remained open. So these two bear bars, instead of having a measure move down, now it’s more likely an inverse measure move to the upside, which is right here at yesterday’s high.
And again, this is not a coincidence. I’ll talk about that in the training room as well. Yesterday’s low and today’s open. Anytime you have two important prices, you always got to be thinking They might generate a third important price, and there’s a measured move from those two prices. Potential target, the computers know that two important prices generate a third important price, and they’ll often be profit takers.
It’s a resistance level, so they’ll often be profit takers at the measured move. And you can see there’s a little bit of profit taking here. As you can see in the video clip, the market went one or two ticks above this measurable target. Computers sell limit orders were filled and the market has a little bit of pullback.
That’s profit taking. And this is the nature of measure move. Two important prices generate a third price. What else is important? Yesterday’s close. So from yesterday’s close to the open and measure move up. Right here. And there is profit taking. Let me show you guys some extra examples from yesterday’s close to today’s open measure, move down the targets right here.
There’s profit taking from yesterday’s close or high. They’re close to each other to today’s open and measure, move down. I want to talk a little bit more about this open. We have to bear trend bars from the open. So it’s reasonable to short at the close of bar two. Look at this. If you take this short and put your stop above the high of bar 1, the price hit 1R very precisely.
So there is a tick failure. And that’s why it’s important to place your limit order 1 or 2 ticks above, just to make sure your orders can be filled. So this is Bear’s target. Hence, a support. And there are traders and computer programs looking to make a 10 point scalp, which is right here. So this is also a target.
And we have talked about this measure move, this orange line before. So this area is actually profit taking area. If you have enough bears taking profit here, and bulls know that as well, they’re going to buy with limit orders. Both bulls and bears are buying, and that’s what triggered this opening reversal.
Now let’s take a look at October 29th. Why this turned out to be a bear trap and you shouldn’t be selling here. The previous day, the titanium range day, Breakout measure move down right here. There are gaps between this close and all these lows. And this gap eventually was closed. It is Bayer’s target, hence potential support.
Gap down from yesterday’s close to today’s open. Measure move down right here. So the first bear bar already hit most of the target. The market has been in this buy zone already. So for most traders at the close of bar two, it’s better to be flat. Just wait to see more information. And I will not go short until I see another bear bar closing strongly below this area.
If we do get that, then the market is telling us the bears are not satisfied yet. They have further targets. Otherwise, the market could just reverse sharply like what you see here. I want to talk a little bit more about this. Let’s say we have no idea what’s on the left. So this is just a strong breakout and a good follow through for the bears.
So it is reasonable to sell the close of two and put your stop above bar one. Since the stop is like 15 points away, the initial position has to be small. Bears who saw the close of bar 2 saw bar 3 and they were disappointed. They knew they were trapped. So they tried to fix this. They sell more on the close of bar 3, which is also near 50 percent pullback of bar 1.
Bar 4 went one tick below the breakeven price. So bears buy limit orders were filled. So bears buy limit orders were filled. And they got our break even bar five tells you that all the bears just gave up. So if you can manage the trade correctly, most of the time, even it’s a trap, you can get our break even without a loss before you stop being hit, but it may not be worth it.
You have to manage your risk really well. You have to manage the trade really well. So it’s not for beginners. Similar situation here on November 5th, bar one bar to hit yesterday’s high right away. This bull breakout might be the beginning of a trend. Or, it could also be a vacuum test within a training range.
And here, one, pull back, two, might be a second leg trap. How do you tell the difference? You wait to see more information. Bar three, very prominent tails below. It’s not a good looking cell signal bar. It’s not strong enough for the bears. Most importantly, bar four, it closed above ESA’s high. It closed above the exponential moving average on the 60 minute chart.
And the gap remained open here. So now we know this might be a buy the close bull trend. So you can buy the close of bar four, put your stop one tick below bar three or bar two. Here’s one R two R and it’s also the third push to our third push. It’s always reasonable to take at least partial profit or like outset in the training room.
This is a head and shoulder bottom. The first target is from the head to the right shoulder. Measure move up, which is around here, the most important price right now on this red line. Yes, it’s hot. Plus, it’s that measure move from yesterday’s low to the top of that cell phone max. And it’s also at the 60 minute moving average.
So we’ve got a cluster of magnets and low last week. So we have a cluster of magnets up here and the goals for like, to get above all of them. I do not think the bulls will get above all of them. They might test them, but I don’t think we’re going to break significantly above them today. I talked about the importance of knowing where the target is.
I think in fact, it’s one of the most important things in trading because. Once you know where the target is, you can enter for any reason. A couple weeks ago, I made an English video as well as in my own channel, a few Chinese videos introducing what has been happening in the China market. And um, this is one of the stocks I have been talking about in trading.
Initially, I entered on October 10th. Buy and hold. And I occasionally when available scalped a little bit along the way up just to lower my unit cost. But here you can actually buy in any time and any price for whatever reason, because you know, there will be a second leg up and this previous high will be tested like we did here earlier today.
Actually, I scouted in and bought more at yesterday’s close. And it’s kind of interesting that. Um, earlier today I should be taking partial profit at new high, so now I can buy them back at a lower price. But I was making this video and I missed some trades. But it’s totally fine, this will not be the highest price, and actually I’m very happy to scaling lower.
I did place a buy limit order down here when the market opened. almost got filled maybe 10 cents away or something. But anyways, this is just an example. If you know where we’re going, you can enter for any reason. You can buy the bear close like I did, betting on the bear reversal would fail. You can buy the close of this bull breakout because it looks like the beginning of this second leg up.
And you can buy when the price breaks above this bull flag. A few months ago, one day I caught an Uber from the airport back to my home, and we were so stuck in the traffic jam that basically we were not moving at all. But all of a sudden, the driver’s voice navigation said something that really touched me.
It says, The road ahead is congested. But we will eventually reach our destination. And I was like, man, trading is exactly the same thing as driving. Sometimes you will have deep pullback. Sometimes you got stuck in the training range that is not going anywhere, but eventually we will reach our target. But the question for you is where does your confidence come from?
When you listen to Al, he is so chilled. He knows where the market is going because he has been trading and looking at the charts tick by tick for the past 40 years. And Rose, Rose is extremely good at calculating profit targets. If you listen to her carefully, you know, she trades with confidence, not just confidence, she trades with faith because she’s making money every day and she know it works.
So confidence comes from knowledge. It comes from practice and successful experience. And that’s what I want to share with you guys in today’s video. Of course, I’ll discuss many other things as well, but because of limited time, making such a video is kind of time consuming, but it’s so worth it. I learned so much from studying Al’s videos, and I hope you do as well.
Thank you for listening, and have a great day.
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