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Hey,
Al says Strong Bulls will wait TBTL down after the Parabolic Wedge before buying again, in this case the 2nd leg came >20bars after the Parabolic Wedge. Do we reset at this stage, ie. are we now in a horizontal TR, and therefore the next BO will be the first BO from a TR and therefore yield TBTL in that direction. Or are we still expecting a 2nd leg to happen, ie. was this "2nd leg" really just a BO from a TR instead of the 2nd leg in a TBTL from the prior Wedge Top?
Noah, my take at it ... could be wrong
Hi Noah,
A second leg of TBTL from a parabolic wedge top(and any similar major pattern) can come much later, and it becomes absolutely clear post fact.
You need to be wary and look for reasons why or if the market is showing signs of getting a second leg.
Generally, a second leg becomes unlikely if the first leg turns out to be a trap. You can see such instances on broad channel days. Market gets a strong breakout, which then reverses and gets a deep PB, which also fails and the market continues in the direction of the first breakout.
Here, what made the second leg down likely was as follows - The strong bull bar on the 3rd push up of the parabolic wedge was still a reasonable buy. Anyone who bought above it, could not avoid a loss as the market turned abruptly.
Here, the odds were 80% that the market would reach the mid-point of the first reasonable buy and the later but. Although, I can't be sure if the market did actually reach that from the chart - I can definitely see a lot of hesitation and weak PA behaviour from the bulls near that area. Add to that, a minor double top with strong looking bear bars - that would be good enough hint for me to go short for the expected second leg.
