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Hello,
The biggest problem I have is that on any given chart I see multiple trends/ranges, f.e. there will be a breakout of 3 bars tall, a range of 10 bars, bigger uptrend of 50 bars and a huge TR of 120 bars (numbers are made up for the sake of question). Which trend should I pick and why?
I usually pick the most recent one but usually it turns out that it didn't work out as major trend took over. Then switching to major I miss the recent B/O and developments, so what's is the best way to trade proper structure? Thank you!
If you see multiple trends and ranges you are probably in a TR so you should trade accordingly but, talking in abstract terms is difficult so, why don't you post a chart so we discuss a concrete example where you got this trouble?
A good place to learn what to look at at any given moement is the webinar, maybe you can try, if you haven't already. There you can see Al's thought process and will know where he is putting his attention as the day goes on.
Thank you for your reply! You're right, the mostly likely scenario is that I'm seeing at TR, however let me rephrase the question and ask it in a different way: how many bars does it take to conclude that we're in a new trend/channel?
The reason I ask this is because Al mentions many times that BO's late in a trend usually fail, however let's say we had a bull channel for 40 bars, then a TR for 10 bars and then a new bull BO above the range for the last 5 bars. Are we still in the channel and that BO is late in the trend or it's a brand new trend? At what point does the count resets?
Thank you!
Al starts naming a PB in a trend as a TR after 20 bars, so in your example, with only 10 bars it is still a PB and its BO is late in a trend. The BO is more likely to be an exhaustion gap than a measuring gap yet if the BO goes for 5 bars, depending on how strong they are, traders make conclude the low event happened and it is indeed a measuring gap and the MKT will go up for some kind of MM. Alternatively, if those 5 bars are weak in a two legged move and at some kind of resistance, then it is the end of the trend and the start of a TR or reversal.
Thank you Ludopuig!
When you see several trends in your chart they are probably legs in a TR, so buy low and sell high. Yet, in hindsight it is clear this is a huge TR but when you are at point 1 (see the attached), you have a very strong bear trend, not a TR.
So at 3 you have a Parabolic Wedge (PW) and you should expect two legs up but also the reversal to be only minor. Yet, the MKT broke strongly above 3 DT so the minor reversal turned out to be a major one and a test of point 1 (begin of channel down) or MM 1-2 should be expected. It went much higher but at 4 you have BUBD and a PW at the top of a developing TR.
Again the reversal should be minor and the MKT should test up to give a MTR before going down. Here it happened that way so 5 became a W and DB PB that was followed with the 6 HH MTR PW. From there The MKT just rocketed down instead of forming a TR with 5 so it was headed to the low of the TR (6 formed a DT with 4 so bears wanted a MM down to around 2).
7 was another PW at the bottom of the TR and 1 BO test and the MKT broke strongly above the EMA with 8 BO, strong enough for having 3 legs up.
9 Was the third leg up but the Wedge failed at the EMA but it turned out to be that 9 was a Final flag and 10 a failed BO above a W at the top of a TR. 11 is a LH MTR that went again all the way down to 12 with another PW that this time gave a TR instead of another explosive push up like 1-4.
So, to summarize, you need to follow the PA as it develops but, having said that, trading this kind of explosive markets is very difficult. At the end of the day, reading the chart can be easy but in real-time placing the trades and managing them correctly is very difficult so be patient and keep going!
I'm sorry but the latest attachment doesn't load for me, would you be so kind to reupload it please? Thank you!
Here it is again, let's see now!
I can load it now, thank you very much!
Let me rephrase my question: pretend that we're at point 9 in time. When I look at the chart I can see 2 trends - downtrend 4-5-6-7 and also broad bull channel 8-9. Also, just before 9 there was a BO of the smaller bear channel.
The question is about magnitude, both 3 trends coexist at the same time and all of them are correct. F.e., I can say to myself - Ok, a nice BO above the bear channel (before 9) so I trade that BO. But then I realize that this BO is a part of the broad bull channel so I should not be trading as BO but trade broad bull channel instead and then I say hold on a sec, there's a DT happening and I'm totally blind to it and it can go on forever.
Hence is my original question, how far back should you be looking and what is a right magnitude of trend should be chosen? DT is way too small, BO is way to little?! There should be an answer to this relatively simple question I guess.
Thank you!
Sorry but I am a little bit lost now
Ok, a nice BO above the bear channel (before 9) so I trade that BO
Not sure what you meant, the bear channel in red was broken out at 8 BO, is this what you mean or other BO?
there's a DT happening
Sorry, which one do you refer to?
I'm talking about BIG DT 4-5-6. It's better seen on much higher TF chart, f.e. on 720
My point is that there are structures that occupy 3-5 bars, 10-20, 20-50 and 100-200. Which ones should be prioritized over the other and why?
The big picture should drive your trade decisions: What is the big picture here? It is not three different trends, it is a TR.
Therefore it is perfect to sell the 4-6 DT but not expecting it to go on forever but exiting at a measured move or at the low (7 wedge), whatever comes first. You can't buy around 9 or 10 because it is not a bull trend, it is still a TR so you should be exiting longs and be thinking to sell there (you should expect 9 PB to be the final flag).
Same thing at the low, you can buy 8 BO because you are buying a BO at the low of a TR but you should exit at the high of the TR and not expect a trend. 8 si strong enough for 3 legs maybe to the top of the TR so you can also buy the PBs along the way if they don''t occur at the top of the TR (as said before, like 9).
Finally, related to the smaller patterns, because the MKT is fractal every pattern will give the probabilistic result as well (like 9!), so seasoned traders can take them as scalps but you will put yourself on the right path if you are not looking to buy at 9, because many times this final scalp fails (not here) and you also lose the swing short as well.
Not sure if I have answered your question, if not, insist because understanding MKT cycle is the most important thing! Maybe you should go thru the related videos again, there you have charts similar to the one you have attached.
@basileusbasileus-net
Generally speaking, you shouldnt have more than 100 bars on the chart, if you are trading the 5 minutes, you should only look for trades on 5 minutes, same goes for 15m or 1H, etc... just find your comfortable spot and start using it consistently, trade whats in front of you, dont think about daily time frame if u trade 5 minutes chart and u will close yr trade before the end of the trading session, This will make it easier to focus, there is already alot of info to analyze on 5m, dont confuse yrself by looking or imaging whats happening on higher time frame.
Market cycle and structure.
in any chart, most of the time there is good arguments for bulls and bears, both can make money if you structure the trade correctly, I know this is quiet difficult in the beginning when you trade and it will be much easier when you have some screen time.
Attached is a snapshots of bulls and bears cases on your chart
@basileusbasileus-net
Bull case
Guys, thank you very much for your input, I appreciate your feedback! I guess I was chasing another answer and need to explain better what I'm trying to understand. Please refer to the refined screenshot below.
So here we have:
1) An active uptrend 1-2 with controlling low 1 never been broken. We may argue that's still valid
2) Failed continuation of uptrend 3-4.
3) Downtrend 4-5 becoming broad channel 6-7
4) Bigger broad channel 4-1 or 4-10 with low 3-7
5) Another channel 5-7 and 6-8 with 10 breaking above the channel
6) One more!!! Valid uptrend 9-10 and a bull channel 7-8 and 9-10
giving us 6 different structures in total. Please hear me out on this: how do you decide what structure do you pick? How far back do you go? Is there a preferred magnitude of the structure (minor vs major)? Again, the point of my question is not to argue whether the particular structure is legit (at the end of the day most of them will be subjective to a certain extent), but understand how far back to go and what structure to pick.
The reason why I'm asking this question is because I load a chart and say to myself "ok, a nice BO 9-10, it's breaking above channel 6-8, 3 big bull bars closing on their highs, I see a nice BTC trend so I buy the close. Then uh-oh, I realize that I'm buying not in a BTC trend but in the bull channel or even worse at the top of another bear channel that I didn't see. Is there a particular way how you read the PA and prioritize structures one of the other to avoid abovementioned mistakes?
Thank you!
