[trader5]

Originally Posted by albrooks »

the move to 930 was a two legged sideways move that had 2 smaller 2 legged moves in it. as the move traveled sideways, it broke the trendline from yesterday and this move became a large possible Final Flag, so I was looking for reasons for the trend to turn down. The false BO of the top of the channel was perfect and the trend was then down from there unless something else developed, which it did not.


tcl trend channel line
bw barb wire
dt double top (bear flag)...the Lower High was in the form of a Double Top Bear Flag

Originally Posted by forrestang »

Here is another question for Al or anyone else with some insight, as this is material from the first 50 pages of the book.

On the chart in the picture, bar 4 was said to NOT be a good signal bar for a short. But, it does seem to come right up to the MAJOR trendline, and it is a pretty decent reversal bar(ok sized tail, shaved bottom so it was sold right into the close).

It is also the second leg up from a low of the day reversal. So there seems to be a confluence of events that would make this a reasonable short setup, other than it being an L1?

It wouldn't be reasonable to short there because it followed 11 bull bars in a row - one would want to see some more demonstrated strength to the downside, such as at least a 2nd failure to break the trend line and a break of the trend line between bar 3 and the 11:30 bar. Traders who took that L1 short were trapped and helped the move surge higher in bar 5.
Somewhere in the book, Mr. Brooks mentions not taking an Lx short entry if it follows 4 bull bars in a row.

[ACS]

Originally Posted by rigel »

If you Study Chapter 4 on Pullbacks, especially as of p118, a significant trendline break is required prior to such trades, hence if a bull trendline was broken and then there was a pullback forming L1 and L2, that would be a good short, and more so if below EMA.
This section also clarifies the confusion on H1, H2, H3, H4, L1, L2, L3,L4 .

Think that is a typo error on page 120, "Likewise a Low1(L1) occcurs in an down or sideways market", think it should be "an up or sideways market"

Up obviously means a retracement up after downbars which break a bull trend.

Perhaps Al can clarify this.

The book is correct. In a bear you are looking to get short at the resumption of the trend down after an upwards correction. That is exactly what the L1, L2, etc show. This implies the correction up was not strong enough to change the trend. When the trend is down you normally only count Ls until there is a confirmed or at least presumptive end to that trend. The exact opposite is true for Hs.

[rigel]

Then we have a problem:

If you look at the para before the quote on p120,

"H1 occurs in a down or sideways leg ......................... ................."

Then : "Likewise a Low1(L1) occurs in an down or sideways market"

Has to be "an up" not "an down" grammer))

H1 is in a downleg of a bull trend
L1 is in an upleg of a bear trend.
ie. both should occur on retracements for ideal long and short respectively.

Am sure Al brooks can clarify.

[ACS]

Originally Posted by rigel »

Then we have a problem:

If you look at the para before the quote on p120,

"H1 occurs in a down or sideways leg ......................... ................."

.

You didn't finish the sentence. "H1 occurs in a down or sideways leg of a bull move..." The "down or sideways leg" is the correction in that ongoing bull move. The overall trend is still up; the leg didn't change the trend, it only served as a correction within it. With that correction presumptively over, you begin looking for with trend entries again on Hs.

[forrestang]

To clarify, that short I posted is not one that I would personally take, mainly because there was too much of a move up, to consider a short there.

And in the book, it's stated over and over, that you want to see a TL break then a retest of the extreme. I think I look for this all the time during real time trading before considering reversals.

But there are a lot of reversal examples shown that don't seem to meet this criterion.

[rigel]

Originally Posted by ACS »

You didn't finish the sentence. "H1 occurs in a down or sideways leg of a bull move..." The "down or sideways leg" is the correction in that ongoing bull move. The overall trend is still up; the leg didn't change the trend, it only served as a correction within it. With that correction presumptively over, you begin looking for with trend entries again on Hs.

Read the full post again:

H1 is in a downleg of a bull trend
L1 is in an upleg of a bear trend.
ie. both should occur on retracements for ideal long and short respectively.

If that is not clear enough, go to page 128:

"The pullback usually forms a High 2 pullback in a Bull or a Low 2 in a Bear (an ABC correction)"

HENCE L1 OCCURS IN AN UP OR SIDEWAYS(ABC CORRRECTION, RETRACEMENT) MARKET IN A BEAR TREND AS AN IDEAL SHORT SETUP Based on this there is a typo error, why not let Al brooks comment on this.

[djohnsonhot]

Good call, ACS...I was about the post the same reply. Based on Al's other articles, and from another forum called Sanuk (Google groups) one must be constantly diligent to recognize when a prior trendline has become irrelevant to the current Price Action.

Oh, and I am surprised that there was not another T-Line drawn from the bottom at Candle three to Candle 5. The two candles prior to 5, at approx 11:28 to 11:30 bounce off this T-LINE.

DJ

[ACS]

Originally Posted by rigel »

Read the full post again:

H1 is in a downleg of a bull trend
L1 is in an upleg of a bear trend.
ie. both should occur on retracements for ideal long and short respectively.

If that is not clear enough, go to page 128:

"The pullback usually forms a High 2 pullback in a Bull or a Low 2 in a Bear (an ABC correction)"

HENCE L1 OCCURS IN AN UP OR SIDEWAYS(ABC CORRRECTION, RETRACEMENT) MARKET IN A BEAR TREND AS AN IDEAL SHORT SETUP Based on this there is a typo error, why not let Al brooks comment on this.

I hope he comes back and participates in the discussion but I think we actually agree. Perhaps the book could be clearer on when he is talking about the overall trend or just a leg within that trend; that's where the problem seems to be. Good luck!