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Hello fellow traders,
My question is regarding TTRs and what to expect after them, as Mr. Brooks had mentioned that a B.O. evolves in a channel and a channel evolves into a TR, does the same logic applies to TTRs? what I mean is if the market has been trading in TTR for a few hours (30-40 bars on 5M chart) that forms an i-i-i pattern on HTF and if it breaks out of that TTR with a strong BO, what is more likely to happen? Is the BO likely to fail and the TTR will end up expanding itself into a TR or a Broad channel or the BO is likely to succeed and there will be a trend? Is TTR BOM?
So like a strong trend is not likely to turn into a reversal or a TR before turning into a channel first is the TTR also not likely to BO into a trend before turning into a TR or a Broad channel first?
Hi Chandra, take a look at below image
https://www.tradingview.com/x/7RtttA9L/
TTR itself does not provide much of information about what the breakout would result in... For that you need to zoom out and look the broader market structure
As in image you are able to see 2 TTR and both gave upside breakout and continued the trend to upside... and that was only tradable if at all you know that actually in which phase the market is
Case 1: If market forms a TTR in TR then chances are that TTR breakout would just result in a TR
Case 2: If market is in bull trend (like in image) depending upon the strength of the trend, if market gives BO of TTR then chances are that you might see again a BO phase after TTR BO
Hope you got that!
Thanks for the reply, the example which you referred to seems to be different then the one I had in mind on the count that in both your cases the TTR did not last for more than 15 bars and its safe to say in those cases it still had a positive bias to continue to do what it was doing before the TTR began, hence looking at the broader picture is the obvious answer in those cases. I was referring more so to a TTR lasting more than 30 Bars (2-3 hrs) where market is almost fully neutralized.
Yeah I got your point, take a look at these
https://www.tradingview.com/x/eYFy0PTJ/
My point is no matter how big the TTR is, it always have a higher probability of following the broader market structure... As you see here TTR gave breakouts in the direction of the trends / channels
Thanks for the reply. Your insight is valuable and the chart you presented is crisp and does clarify the point you making, but if I may rephrase my question, regardless of the direction I would like to know the phase of Market cycle which is more likely to follow after a TTR, for example a successful BO/ tight channel eventually is likely to evolve in a Broad channel maybe before it turns into a TR followed either by continuation of the prior trend or MTR, similarly what is the likely phase to be followed by a TTR? or Does the TTR sets the ground even and any phase is as likely to follow as any other?
in other words does the market inertia plays any part here? If the market has been in a TTR for hours is it likely to have more failed BO rather than a successful BO? is it more likely to expand range and turn into TR or into a Broader channel before a successful trend is likely to begin?
Yes I understand that...
So what I believe is that TTR is nothing but a volatility contraction right?
So as we know market moves from:-
High volatility → Mid volatility → Low volatility → High volatility...
So TTR is nothing but a Low Volatility phase so the thing is it has a likely to followed up by high volatility (that is Breakout phase)
Got that?
Yes, that does makes sense, Does the market inertia plays any part here? If the market has been in a TTR for hours is it likely to have more failed BO rather than a successful BO? is it more likely to expand range and turn into TR or into a Broader channel before a successful always in long/ short trend is likely to begin?
Yes Market inertia do play a role
More over as I already told you about the volatility cycle, if the TTR is forming just after High volatility phase then higher chances that BO would just lead to a TR or a channel
Yes all Trading ranges act a magnet after BO so trading TTR breakout is always having lower probability of success. So if at all Trading TTR then trade with high R:R
Hope you got that!
