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  1. Thanks
    phantom got a reaction from tomtr27 in What Really Works for Technical Traders   
    Using this chart of yet another euro breakout, allow me to instruct you on another form of price rejection, the false breakout-reversal.
    Pay strict attention to the price action around the red arrow. Following a break below the 20 period moving average at around the 3:40 mark, the market moved into a sideways channel consolidation. The market moved up to a close near the high end of the channel range after peeking above the prior range high (the green bar just prior to the red down bar signified by the red arrow). The red bar moved all the way across the range and closed below the entire channel range. Following a short test, ie the "rattail" portion of the subsequent bar, the market plummeted. I sold the break of the arrowed bar with my risk stop one tick above that same bar.
    Let's take a closer look at the market dynamics behind this form of price rejection. Prior to the breakdown the market tested the range high and even broke above the high. But the key element here is that the market did not FOLLOW THROUGH (false breakout). Instead, it moved all the way in a single bar through the trading range with a close outside the range on the other side (reversal). In other words, the market rejected the attempt to breakout on the high side of the range and opted to breakout strongly through the low side of the range. If the market doesn't meander back into the range and stay there any longer than it had to to complete the test (rattail portion of next bar) I am short this market!
    I call the red-arrowed bar a volatility breakout bar due to its relative length with respect to the other bars in this consolidation. Also note that the MACD turned down with this vol breakout bar, confirming market direction and momentum.
    This is a case whereby a hammer wasn't used to enter the market, but was replaced by a volatility breakout bar. In either case, price rejection was the "signal" used to enter the market relatively safely. Once again, the driving force behind the huge follow-through was the breakout of the much larger range that preceded the small consolidation breakout, providing enough "potential energy" to convert to the kinetic move you see at the right of the breakout bar.
    That's the lesson for the day. Now go locate these opportunities for yourself and make some money!

  2. Thanks
    phantom got a reaction from tomtr27 in What Really Works for Technical Traders   
    Let's take a look at another breakout. This one occurred last week in the euro.
    What is striking here is how distinctive the post-breakout hammer was leading to a marked downswing.
    These are the "picture perfect," ultra low risk type trades I love, for sure.

  3. Thanks
    phantom got a reaction from tomtr27 in What Really Works for Technical Traders   
    I promise to provide enough fodder to get you profitable if you aren't brain-dead, but I refuse to spoon feed you. Fair enough?
  4. Thanks
    phantom got a reaction from tomtr27 in What Really Works for Technical Traders   
    This is the July Beans showing a perfect consolidation breakout followed by a hammer. Notice the "rattail" that helps identify the hammer. See if you can identify the other two hammers in this down move (both excellent places to pyramid your position).
    This is only one of several breakout systems I developed and trade but I'm able to get in on several sustained breakouts each week with this method in just the currency futures alone.
    Hope this helps.

  5. Thanks
    phantom got a reaction from tomtr27 in What Really Works for Technical Traders   
    I read somewhere on this site that technical analysis doesn't work for day traders. It sounds like most traders are having a hard time discerning what's important and what's fruitless with regards to intraday signals. I am starting this thread to cut through the clutter and tell you how the markets can be traded in ANY time frame.
    In this lesson I will explain the two most elementary technical signals on the chart: price rejection and price acceptance. I'll bet that most traders have a hard time determining the general intraday trend and I believe this is due to your dependence on ultra short term charts, such as 1,2,3 or 5 minute charts. Moving out to 15 minute and 30 minute charts one can see things that are basically invisible on 1-5 minute charts. What I like to see on a 15 or 30 minute chart is a hammer or doji candlestick following a consolidation or range breakout.
    What is the psychology behind the hammer? Price moved from the breakout zone to some new level. Then price then retraced towards the consolidation zone and was rejected (hammered) back into the direction of the new trend. The breakout of that hammer bar IS THE ABSOLUTE SAFEST BET YOU CAN MAKE!!! Why? Because if the market just got hammered away from a price level, what do you think the odds are that price will immediately return to that level? Not very good odds at all.
    The doji is similar in nature because it still shows price rejection on a lesser scale, but also vividly displays the mini-consolidation which leads to a continuation move. And both breakouts CLEARLY DISPLAY WHERE TO PLACE YOUR PROTECTIVE STOP, at the other end of the hammer or doji bar following the breakout of that bar! Since the number one rule of trading is to always know your risk BEFORE you enter a trade, this is the best indicator in trading. (It doesn't hurt to have MACD confirming your trade direction, but it is not imperative). Just use the 20 period moving average as your trend filter and NEVER trade against the trend on the 15 minute chart.
    Price acceptance is when the market moves to a price level that previously turned the market around but this time doesn't, thus indicating that the market may still go further in its present direction. This is most useful when the market is searching for support or resistance after a prolonged move and you are trying to decide whether to exit or add to your position. I'll leave trade management for another discussion.
    Hope this helps!
  6. Thanks
    phantom got a reaction from Nevonslovell in Advice for Beginners....don't Try to Make Money.   
    Don't try to make money? Are you out of your mind??? Of course you should go after profits right from the start. Just remember to look for trades that have a decent probability for a high reward to risk ratio (such as 5 or 6 side-by-side bars on a 120 minute chart in just about anything breaking out into a steady move on a 15 minute chart: trade any 15 minute bar that shows price rejection, such as a rattail candlestick; risk half the rattail range and lock in profits as the move breaks from your entry zone...)
    How dare you advise people to settle for mediocrity when one needs to build successes in this business to stand a modicum of a chance at success???
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