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I took a first short position in bear breakout and closed at the bottom showed by the arrows.
I could see a start of a bull channel = bear flag. I took another short position at the 4th push up considering the market would reverse from there but had to get out in the next bar since it looked seems like a bull breakout rather unusual. I am not sure if I should consider taking a long position here since it a bear flag followed by bull breakout?
Hi Nandkishore,
Nice first trade for opening reversal and excellent hold. With such a swing probably already done for the day 😀
Here are my thoughts about the 2nd trade.
If you consider the price action earlier (red lines channel), then (A) was a breakout of it, then it retested the TL from the bottom and tried to start bear trend with push to (B). But it looks like the trapped bears from (A) were rather looking to escape during (B) instead. They couldn't even reach their breakeven price and you can see what happened.
For the 2nd trade, selling a small bar against 3 cc strong bulls is low probability.
Also once (A) (B) makes a clear DB and bulls break above the neckline strongly, can expect an MMU.
Also as you were using the purple channel at the time, a breakout above a bull channel is lower probability so if you do want to buy it may be better to wait for a PB testing the TL first. This happened a bar after your short entry. So good that you exited.
Hope that helped!
CH
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Thanks Carpet.
That's a great explanation. I probably should have drawn the way you drew. It makes more sense to draw the trendline where you picked up the starting point of the trendline.
I did change the purple channel later to look more like a rectangle don't know if it was right. I took a long trade after watching for sometime once the bars were getting bigger then I took a small trade and exited on that long wick bar highlighted, although that time it was a big bull bar which i thought was a buy climax.
Your explanation definitely broadens my understanding more about price action. Please keep post your comments on my trading journals 🙂 .
Thanks
Nandkishore
