Advanced Big Bar Techniques

Transcription

1 CME July 20, 2018 Advanced Big Bar Techniques Al Brooks Price Action Fundamentals Brooks Trading Course

2 Main Points Slide Big Bars (Surprise Bars) Breakout, Reversal, Exhaustion, Give-up 2 Slide 1

3 Surprise Bar: Price Needs to Change Give-up Bar (type of Surprise Bar) Bulls giving up, but no major top 2 nd leg sideways to down likely BO Bar Huge bear bar Measured Move down likely Most trend bars do not give much information Sometimes get unexpected big bar (Surprise Bar) Unexpected means low probability event Surprise Bar tells traders something has changed Market needs to move to new price Exhaustion Bars Big BO late in trend Probable exhaustion Reversal Bars Strong reversal up Measured Move up likely (open of 1 st bar to close of last bar in BO) Slide 2

4 Give-up Bar Up: Bears Giving Up Bull bar too big Surprise bar usually has at least 2 nd Leg Up Often pulls back a little 1 st Context favors minor reversal since no major bottom formation 1 2? 2 6/26/17 Slide 3

5 Bear Give-up Bar: Big Bear Bar Means Bulls Giving Up Biggest BO late in trend so Exhaustion Gap 50% chance of 2 nd Leg Up before 2 legs sideways to down 1 st target is bottom of BO (Also, bull BO above bull channel fails 75% of time) 1 2? 12/12/17 Big bear bar so bulls giving up (Surprise Bar, Bear Give-up Bar) 2 legs sideways to down likely 2 Slide 4

6 Context Affects Probabilities: Look at Bars to Left Bull BO above Bull Channel Bull BO above Trading Range Gap is from close of final bull bar to low of 1 st bull bar in BO Sell reversal down Buy above bull bar or at close of bull follow-through bar Big bull bar late in bull trend but also BO above TR 60% chance of MM up Huge bull bar late in bull trend BO above bull channel Strong sell signal bar 70% chance of swing down Began as bull leg in TR Became bull trend as prior bear trend resumed Slide 5

7 Context Affects Probabilities: Look at Bars to Left Bear BO below Bear Channel Huge bear BO below bear channel Strong buy signal bar 70% chance of swing up 75% chance trend has ended Bear BO below Trading Range Sell below bear bar or at close of bear follow-through bar Gap is from close of final bear bar to high of 1 st bear bar Buy reversal up Big bear bar late in bear trend but also BO below TR 60% chance of MM down Began as bear leg in TR Became resumption of prior bear trend Slide 6

8 Gap Up Bars: Strong Buying 7/5/18 Open of bar is above close of prior bar so Gap Open Bar So many traders buying the close that the next bar gapped up Strong buying pressure so higher prices likely Bulls eager to B, bears desperate to exit Slide 7

9 Surprise Bar: When Big, Often Get 3 or More Legs 60-70% chance of MM up based on body, and at least 2 more legs up, usually to Wedge Top Extremely big bull bar so 12/15/17 Surprise Bar Low probability event 1 TR 2 Bears tried for 2 nd Leg Bull Trap (failed BO above TR) Good sell signal bar since close on low 4 consecutive bear bars Closed far above bars to left so not test off top of TR More likely successful bull BO than 2 nd Leg Trap When bull bar is unusually big, usually can buy 50% PB with limit order or on reversal up Became bull flag in Spike and Channel bull trend day Slide 8

10 Wedge Bear Flag: Bull BO Wedge bear flag Moving Average Gap Bars Bears sell below bear bar 5/3/18 2 big bull bar BO above bear flag Buy the close of BO bar or above high of 2 nd bar Slide 9

11 Gap on 5 Min Chart: Rarely Stays Open On 5 min Emini chart, 1 bar in 1,000 opens above prior bar s H or below its L 99% close before bar is complete 1/17/17 Opened below L of prior bar Rare for gap to stay open on 5 min Emini chart Opened below close of prior bar, but not below low Not traditional gap down Slide 10

12 Always In Short: From 1 Big Bear Bar 8/15/14 Wedge Failed BO above yesterday s high 1 unusually big bear bar so Always In Short Close below lows of 14 bars Exceptionally big bear bar so Surprise Bar 70% chance of MM down (minimum goal) based on size of body Slide 11

13 Bull Flag: Bear BO Failed BO above Parabolic Wedge Possible high of day Endless PB in Tight Bear Channel Becoming less bullish Strong bear BO below Wedge bull flag Bear bar for follow-through Likely Measuring Gap 15 min chart 5 bar bear Micro Channel Sell below 1 st strong bear close 6/24/14 MM down Strength of bears sometimes easier to see on higher time frame chart Slide 12

14 Weekly Chart: Consecutive Exhaustion Gaps 2 nd consecutive Buy Climax late in trend Blow-off top Should test below bottom of Buy Climax Odds favor 2 nd leg sideways to down Biggest pair of bull bars late (more than 20 bars) in bull trend Probably Exhaustion Gap Bars Strong BO so 60% chance of one more leg up after 1 3 bar pause (here, one small bull doji bar) Then, 60% chance of test to below bottom of Buy Climax Slide 13

15 Biggest Bear Bar Late in Trend: Exhaustion Gap Bar EURUSD 120 min Biggest bear bar in more than 20 bars into bear trend Exhaustion Gap Bar and end of trend more likely than Measuring Gap and new swing down 60% chance of one more Sell Climax before reversal up Slide 14

16 Huge Bear Surprise Bar: If in TR, Possible 2 nd Leg Trap Emini example TR or bull channel 1 2 Strong bear BO so early bear trend But, look to left Still Higher Low so bull channel or TR, as well as early bear trend Strong bull reversal Bear BO was 2 nd Leg Bear Trap (failed BO) in TR and bull channel Slide 15

17 Bull MC in Extreme B Climax: Expect 2 Legs Down 14 bar bull MC Very strong, usually expect only minor reversal Here, got major reversal Bulls disappointed by big bear bars They exited at high close, creating Micro Double Top 2 nd entry sell for at least test of bottom of Buy Climax Bulls who bought the highest close were disappointed by bear bars 11/30/17 But, bought more when returned to highest close Got strong bull BO 60 min chart 2 bar buy climax Slide 16

18 Buy The Close (BTC): Deep PB, So TR Bulls who bought high close bought more lower Can exit break even on 1 st buy and with profit from lower buy Other bulls bought lower, expecting test of highest close When taking reasonable entries and managing well, 80% chance of profit or no loss 3/29/18 Buy The Close (BTC), 8 consecutive bull bars Strong selloff but deep or prolonged PB and TR more likely than bear Sometimes take 20 or more bars to get back to highest close Reasonable Buy The Close, but no micro DT to let bulls exit without loss Odds favored test of highest close so bulls could scale in and avoid loss Slide 17

19 STC Disappointed Bears: Minor Reversal Up and TR Likely Sell The Close Disappointed by big bull bar Exit breakeven or above bull bar If disappointed bears get out, but still Always In Short, must sell again below bear bar Here, Double Top bear flag near MA 7/6/17 If bears disappointed by lack of follow-through after selling close, become afraid might have sold final Sell The Close bar Now, know PB and TR more likely than more bear trend Expect at least one more selloff to test that close Slide 18

20 4 Small Bars: Can Also Lead to Big Moves TR is about half height of average day s range Odds favor BO and about MM up or down 6/8/ consecutive small bull bars Every close at or above prior close (Trending Closes) Highs and lows also trending up 9 bars Tight Bull Channel Buying Pressure Increases chance of bull BO Buy the Close or buy above bull bars, or buy close of BO Bar Slide 19

21 Buying Pressure: 8 Consecutive Bull Bars Only 2 bear bars in 1 st 25 bars 7/16/18 7 bars without a pullback Many bull gaps and micro gaps (not shown) Odds favor at least a little more up B below prior bar B above prior bar Yesterday s L 8 consecutive bull bars so bulls owning many bars Very few bear bars so eager bulls Buying pressure makes higher prices likely Slide 20

22 Bad Flags: Fade Buyers and sellers above and below every bar 50% of time, stop order traders win and BO succeeds 50% of time, limit order traders win and BO fails BO pullback buy, but big bear bar, and consecutive bear bars at top of TR Bad Bull Flag More sellers than buyers above Sell and scale in higher for scalp 6/8/18 BO pullback sell, but bull bar and PB from bull leg in TR Bad Bear Flag More buyers than sellers below Buy at low for scalp Be willing to scale in lower Slide 21

23 Review Slide Big Bars (Surprise Bars) Breakout, Reversal, Exhaustion, Give-up 2 Slide 22

24 CME July 20, 2018 Advanced Big Bar Techniques Al Brooks Price Action Fundamentals Brooks Trading Course