Al Brooks - Brooks Trading Room Open House November 1, 2024

Can you sell the market here when we were at this price yesterday we had a big bull bar and they sold it I wouldn't do it this is a reversal a sell off and reversal up so to sell I think the Bears will need a pretty good sell signal bar [Music] yesterday had a big gap down and then a sell from a better Channel and then it was sideways for the remainder of the day tremendous volume at the end of the Day bar 78 is the final bar of the day and it had close to

I had about 190,000 contracts traded Mar 78 always has the most volume of the day but yesterday was also the last day of the month so that's the reason for extra volume and the monthly chart I think is very important because look what October ended up being a very reversal day closing on its low so we're going to trade below the October low we might do It today we might do it some next week we're going to trade below the October low and we're at the top of a channel different ways to draw it you

can draw using this high and that high or this high and that High and um Market tried to get a double top here instead we got a breakout and the breakout has three legs up one pullback two pullback three so when the market repeatedly tries to pull back after you've had two or three Reversals you tend to get a bigger pullback lasting a couple legs down so October is probably going to be the high for the next two or three months at a minimum and how far down do we go we tested this breakout point

the pandemic the post pandemic rally we tested that here I think that's a logical area to test also we have a a breakout a spike up pullback and a channel Market tends to come down to where the channel began which is all Al in that area so that's About a 10% correction weekly chart same thing here's the rally after the pandemic and the market tried to remain in a trading range instead we broke out here and we have three legs up one pull back two pull back three and when you have three legs up it's

a wedge and you typically get a couple legs down a couple legs down on the weekly chart it could uh it could be like this here we got three legs down lasted a couple Months so we're probably um in the beginning of a um pullback and you always look at prior lows bull Trend needs higher lows higher lows higher lows higher lows higher lows and when you get a pullback the market tends to generate confusion and one way to do that is to go below a prior higher low right if it goes below a prior

low prior higher low like this you got a bull Trend higher low you went below it Traders Wonder are We going to correct um or are we going to go sideways um there's it increases the chances that the bull trend has ended temporarily so I think the market needs to test this low and the weekly chart does not look like a very good top we don't have a good sell signal Mar here but we do have three legs up and I said this was a breakout and whenever the market breaks out you always look at

what it broke out up it broke out of this High it broke Out of that high and then you look for measured moves if you look for a measure move up the rally started here here was the breakout point and we got very close to the breakout point which is around 5950 or so and I said that that's the neighbor neighborhood where we might get the end of this rally and pull back down to these lows in the 5,000 area weekly chart as I said that's not a good sell signal bar but the monthly chart

has a Very good sell signal bar so it definitely looks like a credible start to a pullback down to this area the 5,000 area so about a 10% correction daily chart um I keep saying this all the time you know we get all kinds of reversals but you always have to assume the market is going to buy every one of them even a big one like this 10% cor correction they bought it and these smaller ones that they look terrible When they're happening like that or that and they're minor you know a week or two

later you you look back and say you don't even notice it so you know right now in the daily chart Traders are wondering is this like all these other big bare days and the market just keeps going up or is it different I think there's 5050 chance that this is just going to be a bear trap and we're going to go up to another high and there's a 50/50 chance that We've begun the correction so on the daily chart we have a nested wedge on the daily chart we definitely have a wedge rally here very

strong bull breakout and profit taking profit taking and typically the third time you get profit taking you get at least a couple legs down we've already had two legs down one pullback too but you know we have and we've tested the most recent higher low so we've done the minimum that you would expect from a W rally two legs down testing most recent higher low but I I think it's more likely we're going to come down here whenever you break out you got to break out here above this tested it you broke out again you

test you tend to test breakout points that high this High we currently testing this high so the Bulls are going to try to get a double bottom with this low but I think if we do go up we'll form a lower high and then we'll get reversal down to here or Here 5200 you know maybe down to 5,000 so somewhere in the next few months I think we're going to be down here what happens if we just I'll do this and break strongly above that then I'll change my mind I always change my mind you

know every new tick is new information and when I get new information I don't stick with my prior opinions you I just I reassess and I make a new judgment and that's true during the day as well you know a lot of Times you know one outcome is more likely than another and then uh you get new information with every check and all of a sudden another outcome becomes more likely and you know one of the difficult things as a Trader is making that change you know you were very bullish and now you're very bearish

it's difficult to um to make that change but it's important right now we're testing most recent cell climax High the Bulls want a breakout and then a measure move up to Yesterday's high and the Bears hope we get a double top break below yesterday's low which is also the October low and that would trigger the sell signal on the monthly chart right now we're at the top of the trading range the trading range lasted over five hours let me this is the open of the month so let me attach that to today's open can you

sell the market here when we were at this price yesterday we had a big bull bar and they sold it I wouldn't Do it this is a reversal a sell off and reversal up so the sell I think the Bears will need a pretty good sell signal there right now the Market's deciding I'm going to break out above that and go up I copied on Bas station on my other computer and I copied this chart over from the other computer and Tra station did an update on the other computer a few days ago and it

did not do the update on this computer so trade station Was unable to open the chart that I created on my other computer so this chart does not have all my lines on for example I forgot to put in yesterday's low yesterday's high I put them in now resistance in the chart the most important support always look at yesterday's high and yesterday's low okay consecutive bull bars closing on their highs um and both bars are big so there will be more Traders buying the market than selling so it increases the Chances will go higher I'm

going to put one more line here this is really the top of the trading range here okay now we have consecutive big bull bars closing on their eyes we're breaking above a bare trend line that I do not have drawn here but we're also breaking above the top of a trading range and this is really an important bar or three if it's a bear bar closing nearest slow if it looks like 45 or 48 then this Is probably a bull trap and we're probably going to go down the minimum the Bulls need is no Bear

bar so even if it's a small Bull Bar like this the odds are we're going to go higher so bar three is really important it's the follow through after the breakout um I don't know if you can see this but look at this we have a low we have a lower low a lower low a lower low but we've also had a high a higher high higher high higher high higher high higher high We're in an expanding triangle so from that low excuse me from that high expanding triangle means you keep getting higher highs and

higher lows and you keep reversing and then at some point the market goes ahead and does something else so you can see we have a low we have a high we have a high we have a low higher high lower low higher high lower low Higher high lower low higher high and the Bears are hoping that the pattern continues and that we reverse down and the bears want three to be as bearish as possible what happens if three looks like 71 a small be body um Traders will not sell it they probably will be more

buyers than sellers below so for this to be the high and the start of a swing down the Bears need as good a bear bar as they can get you know a decent sized body 45 something like that suppos looks like 14 um it's probably not big enough compared to the two bull bars so anything other than a pretty good Bear bar there'll be buyers below and we're going to go higher so right now the market is in a buy the closed Market three is very important what happens if three looks like 68 relatively big

bullar closing unit high that would be really good for the Bulls because then we'll have Consecutive above the trading range and the body of the second bar will be completely above the trading range and when you get that there's a 70% chance you'll get at least two legs up and a 70% chance you'll get some kind of a measured move up maybe just based on the bodies the body of the first bar to the CL the open of the first bar to the close of the final bar of the breakout maybe a measur move based

upon the trading range and the glaring thing is This pair of Big Bear bars the Bears wanted a measure to move down but anytime you have a big move like that and you're thinking about a measur move you got to think that the measure move can be in either direction so don't just assume that the measure move has to be um down it could be up and look what happens if it's up this is not a coincidence right that this low from yesterday is exactly where it had to be so that the measure move up

from Here goes to yesterday's high you know the computers are always it's it's a game of chess and they think you know they think far ahead so those computers knew that this selloff could have an upside breakout and a measure move up and yesterday's high is a really important price so let's make this low exactly half measure move down from from this high and yesterday's side so from yesterday's High to this High that's where yesterday's low was okay so bar three is ex an example of what I said the Bears hope that it's a bear

bar and therefore this is a failed breakout but I said to sell the Bears needed a pretty good Bear bar closing their slope they didn't get it right so that is not as bearish as the Bears want so there probably are more buyers than sellers at and below three however it's not as Bullish as the Bulls want the Bulls wanted consecutive big bull Mars closing near their highs and above the trading range and they didn't get that they have consecutive big bull bars closing near their highs only one of them is closing above the top

of the trading range so not as bullish as the Bulls want and not as bearish as the Bears want and that that's training range type of behavior except that we had a very strong sell off and now now we've totally reversed The sell off we're above it so it's it's more bullish than bearish right now the market and you buy at the three low you probably can I think it's probably not worth doing an expanding triangle is basically a trading range that keeps getting new highs and new lows uh can you short I would not

short so it either be long or flat a lot of times the market will do this and go up to a new high and do it again again up to new High so a small Pullback bull Trend where it keeps pulling back the pullbacks are small but the market keeps making new highs we broke above the Globex High 90% of days either break below the Globex low like yesterday or above the Globex high like today and this is what I mean by a small pullback bull Trend this is a 15minute glowback chart well the market

just keeps pulling back but it keeps making new highs so it's a buold channel that looks weak but it can last a long time It can go up a long long way here's an example of a a small pullback bear Trend where the market keeps pulling back uh but the channel stays tight the pullbacks are small and the market keeps going lower eventually the Bulls give up and you get a big bare breakout yesterday we had consecutive inside bars we had a big gap down so a gap down is a bare Trend it's an invisible

bare Trend You don't see any bars but the market overnight went from that close to this open so there's a be Trend and then an i i and a bar Trend 50/50 chance it will be the final bare flag that a breakout below will fail and 50/50 chance it'll be a be flag in a bare Trend that lasts a long time and that's what it was we collapsed over here on bar four and pullbacks in a small pullback be Trend we uh this is a breakout see how this bar is bigger than these bars so

that's A change in Behavior so we had three lows here one two three and the Bulls hooked for wedge reversal instead we got a breakout and we got another three lows one two me one two and three okay so we had consecutive parabolic wedges we tried to Rally but the pullback is still small and the bare channel is still tight the rally was probably going to be minor and uh it was it only went up a little bit and then we came down here this was a Potential lower low major Trend reversal or low little

double bottom but when a be channel is really tight like this you know the pullbacks are all brief one or two bars the reversal is probably going to be minor which it was outside up bar we went below the prior bar is low and now above the prior bar is high good for the bows especially good if the bar can close on its high the bigger the bar is the more it closes on its high the further above the high Of the prior bar it goes the more likely we're going to continue to Trend up

so good bar for the Bulls we closed above three we closed near the high of the bar increases the chances of higher prices each one of these highs is a target yesterday we had a couple interesting things early in I always watched for this you have a sell off breakout and a pullback and then I look to the left the high of the pullback and the low of the Breakout Point there's a gap there's a space between this high and that wall then we got another breakout we broke low that low then we got a

reversal Lev and the high of the pullback high of this pullback went above the breakout point so there's no Gap but the body of the pullback look at the highest close here it did not go above the lowest close here so there's a gap between the bodies so we have a gap and a body Gap and when you get that There's a 70 or 80% chance that the market is going to be mostly down for the remainder of the day it's a small pullback be Trend and then when you start getting pullbacks that go above

breakout points we broke below that low and we pulled back above it right you start here no but here yes you know once you start to get pullbacks going above breakout points Traders start buying at prior lows so we knew there would be more buyers than sellers at that low we Went up we knew there would be more buyers and sellers at that low and went up we knew there'd be more buyers at this low Traders bought with a limit order here and went up this late in the day it's always dangerous to trade the

last few bars of the day especially when it's the last day of the month because you can get really big bars and the market can move fast but it still worked so if a Trader bought this slow and B more Five Points lower 10 points lower He could have gotten out break even bar 79 with his first buy with a profit on the lower buys I sometimes trade on other markets by the way this is still buy the closed market so buy for any reason and exit below a be bar closing below its midpoint or

exit the size of a scalp below any bar even below bullbar like here you know if you were long here you could exit the size of a scalp below 71 or you could exit below a bear Bar closing below its midpoint you know if you're buying at the top of a rally you believe the trend is strong if the market does something that tells you the trend is no longer strong you have to trade it differently and it's better to get out and look to buy pullbacks instead of continuing to buy near the top so

right now this is a buy the Clos rally this is a strong enough breakout to get three legs on so that's one pullback this is two and you'll get a Pullback probably within the next few bars and then three and Traders will wonder if it's a parabolic wedge top right now it's only a buy by the way I I trade other markets as well and uh yesterday was interesting when here's gold market okay this is a daily chart of gold and two days ago when it was up at 2,800 I I I shorted gold and

the reason for that and I and I bought it back yesterday with a profit obviously but take a look but here's 2700 what happened and went above 2700 reversed here's 2600 and went above reversed here's 2500 and went above and reversed right there's 2400 went above and reversed about 50 bucks right there's 20 uh 2300 2200 went above reversed at least 50 bucks right so you know when you see something obvious that's happening at every big round number yeah maybe it'll do it again maybe it'll goove 2800 and reverse down 50 bucks so Um some

of their patterns that on on the daily chart that sometimes set up for really quick easy trades all right so the Bears want a low to top remember 70% chance we were going to get a second leg up after seeing one two got a pull back 3 four and now we have a second leg up the Bears want this to be the high of the day you know but and it's a low to top it's a second reversal down from above the sh image But um we have five bull bars three is a bull bar

black and white Shard it doesn't look like a bull bar but it actually is a bull bar so again like I said there' be more buyers than sellers at the three low there probably will be more buyers than sellers at the five low well you're going to be wondering is this going to be a parabolic wedge rally is it going up two far too fast and with Three legs up will we pull back this is a similar thing you got a big big rally pullback brief leg up a pullback and third leg up and more

of a pull back so that was a parabolic wedge by climax parabolic wedge buy and sell climaxes are very common here up and then a smaller bar app pause up again smaller bar pause and up a third time and but this is a breakout a lot of Times um you know if if the third leg up is very big you start to count over again so you could look at this as a um a new first leg and then a second leg we got an i i and a bimax um at this point it was

likely we would get a third leg but once you get an i i in a b climax bulls will exit beers will short that's a credible tell out another way to look at this is a parabolic wedge one plus 2+ 3 And then a fail breakout above the parabolic wedge in any case you get a really strong rally and I I that's a cell I I here consecutive inside bars it's not an inside bar it's high is at or below the high of the prior bar its low is at or above the low of the

prior bar so this bar is inside of that bar and then we have a second inside bar so you have consecutive inside bars that's a triangle on a smaller time frame breakout Mode 50% chance you're going to get a successful bear breakout 50% chance you get a successful bull breakout and 50% chance the first breakout up or down will not get very far and Market will go the other way hesitation 34 five six so Traders are wondering are we going to come back to the middle of the trading range maybe a 50% retracement I said

the high of yesterday and low of yesterday are important the Clos of yesterday is Important and the open of today is important and the low of yesterday is important open of today is important so let's take a look at that so yesterday's low and today's open anytime you have two important prices you always got to be thinking they might generate a third important price and there's a measured move from those two prices potential Target and yday we got a breakout pullback Channel right so the start of the channel is also a Target which is that

high which is right around there so we have a couple magnets a little bit above yesterday's range was really big we're in the middle third or so of yesterday range and whenever you have a really big day like here there's an increased chance that the next day will be an inside day that it will not go above the high of the big day it will not go below The low of the big day what the Bulls are hoping is a big day maybe an inside day here it doesn't it still was an inside day but

we closed near the high so the Bulls want a big bull Trend day a big day and then an inside day Big Bear day and then an inside bull day Big Bear Day Bulls hoping it's a bull day they'd like to break up above yesterday's high but you got to be thinking this could be an inside day today that we don't go above yesterday's High and we don't go below yesterday's low and that means if the market goes up Traders look for reversals down if the market goes down Traders look for reversals up Can you

short below six six consecutive bull bars you don't short and there are six consecutive bull bars you need to see some bear bars what about selling below seven um you know I think most Traders are not going to sell below seven we do Have a wedge here we were up on two and then pause three up on four pause five and then up on seven andse so we have a small wedge you don't see it that well on this time frame if I put up a smaller time frame chart you can see the wedge here's

a one minute chart so one two and three very small pullback bull Trend so the first reversal down probably be minor the best the Bears can probably get is maybe a test of that low remember if you're long you do not Have to get out um even though it's a parabolic wedge or wedge time but if seven closes below its midpoint I would get up below seven if seven goes the size of a scalp below six I would get out you know so yesterday for example if you made the mistake of buying the close of

76 because you have three big bull bars and the bodies are getting bigger and you're ignoring the fact that you're at the top of a trading inch let's say you bought that 76 close And then the market fell below 76 and it fell the size of a scalp below do you keep holding long all the way down here risking 35 points or do you say I'm just going to get out the size of a scalp below the prior bar even if it's a big bull bar and you get out down here will lose 20 points

but it's better than losing 35 points size of a scalp recently most days it's Five Points sometimes 10 so that's 20 ticks and for a bear to Make money shorting below six for him to make a scout 20 ticks five points has to fall 22 ticks below six so when I say get out the size of scalp below I mean 22 ticks below you could do 20 it doesn't matter but my thought is if it goes 226 22 ticks below six that a bear who sells one tick below six can make a 520 Scout to

make a fivepoint scal with a stop order if you sell one tick below six you place a limit order to take Profits Five Points below 20 ticks below so that's 21 ticks below six but your order is not going to get fill unless it goes one more tick has to go below your order so it has to go 22 ticks below six Traders are wondering the Bulls are wondering is this the high of the day is this another reversal in the expanding triangle and as I said if if you if instead of waiting or seven

to close on its low and taking a chance that it might be a huge bar and then Exiting below a huge Bear bar you know I I I recommend getting out the size of a scout low Bel low of the pr bar so 22 tick below six if it goes 22 TI below six then a be shorting below six could make money could make a scout and you really want to be long at the top of a bull Trend if bears are making money with stock ERS for me no if I'm buying the cloes buying

at the top of anything I want the bull Trend to be very strong bears cannot make money with Stock orders and strong bull Trends if a Paar does make money with a stock order then the bull trend is no longer a strong bull Trend and I'm no longer going to continue to trade it like a bull Trend I'm no longer be willing I'm no longer going to buy the close of bull bars I'll wait for a pullback and then buy a pullback big outside down can you get outlo seven Um excuse me I don't think

you have to but um it's okay you can also get on 22 ticks below six and then if we got a bullar closing there it's high on an eight or nine you can buy again the Bulls know that so they're buying the close of sell they know a lot of bulls will get out one tick below seven and they don't want Bulls getting out so they'll buy the close of the Bear bar trying to prevent the market from Going below seven and scaring Bulls out I talked about yesterday being a small pullback bear Trend with

a gap and a body Gap so a gap between this pullback and that breakout point and then a body Gap this pullback and that breakout point and when you see that you you don't buy you know you don't buy until there's a clear bottom small pullback bear Trends constantly form wedge bottoms we have the wedge here you can call this maybe In a tent of the wedge this is a wedge if you get a second reversal maybe you buy but only if it's perfect and this is four bar tight trading range with the big tail

on top that's not perfect I'm not going to buy that here we have a low low double bottom a failed breakout and reversal buar closing near his high I will buy above that but for a scout it's probably going to be a line in reverse but whenever you see two gaps or two body gaps or a gap And a body Gap in a bare Trend don't buy only sell and the opposite is true if you see rally where there are gaps and body gaps two or more don't sell only buy okay Bulls trying to get

a breakout a bull breakout is a bull bar closing near its high and closing closing above the high of the prior bar bar one was a bull breakout a bull bar closing in its high and closing above the high of the bar PRI bar bar two was a breakout bar three closed above two but I would not call it a break off because it's not a big bull bar closing nearest high bar four is a breakout big bull bar closing nearest high and above the high in the fire bar and so far bar eight is

a breakdown the big bullar go in as high now Drew this line in here do we have to stop there no the market could totally reverse the day and go up toward yesterday's high and eight you look at it that and you say well I wasn't expecting that so It's a surprise and whenever the the market does something surprising it typically will have a couple legs up so if eight closes near its high will'll probably have at least a couple legs off remember I said that this was measure move Target open of the day is

important yesterday's low is important so um the computers know that two important prices generate a third important price and they'll often be profit takers it's a resistance level so there'll often be Profit takers at the measure move and you can see there's a little bit of profit taking here now eight it can be a bull trap it can be like nine yesterday big bull bar and then it traps Bulls into hoping it's the start of a bull Trend instead the market goes down so um the close of eight is important and the next bar is

important is it going to be a be bar you know yesterday 75 is a bull tra a big bull bar closing near its high Closing with the high of the prior bar closing with the high of the prior 30 bars right so it looked bullish but it wasn't it was bearish more Traders sold the close and sold the high than blood more sellers than buyers the Bulls want this bar to be as bullish as possible they want a bull bar big bull bar a big bull bar closing theide so far it's a bullar and it's

a big bull bar and let's see where the close Is that's a good close for the Bulls um is it good enough to buy the clothes I would not I would wait for the f bar remember I said most Bulls would not exit on seven so Bulls are still long they're hoping that we get a gap between the nine low and the Seven high and maybe a measure move up so the next measure would be be trying to get a trading range here and instead we're breaking above The top the most important price right now

on this red line yesterday's high plus it's that measure move from yesterday's low to the top of that cellon Max and it's also at the 60-minute moving average so we got a cluster of magnets and low last week so we have a cluster of magnets up here and the Bulls would like to get above all of them I do not think the Bulls will get above all of them they might test them But I don't think we're going to break sign iFly above them today important bar again kind of like bar three whenever you have

a breakout the next bar is important will it be a big bear bar closing near a slow in which case the breakout then was a failed breakout and trap I'm sure you saw that the unemployment report today was Bad did not create many jobs in last month looking at the report they forecast that um we were going to get 180,000 jobs and we got 12,000 jobs so why is the market going up if we have a sign that the economy is weak it's going up because a week report increases the chances of lower interest rates

lower interest rates means money is more Available and if you have more money you got to invest it and one way to invest it is to buy stock so in to make the price of stock go well okay the Market's ignoring that measur move so I'm going to ignore it again the most important price is a little bit above yesterday's high this measur move last week's low 60-minute moving average a lot of magnets up there so that's where we're headed now I have a measured move based Upon this trading range if it goes above it

then I would look at measure move from today's low to the breakout point which is the high of seven surpris it's around that cluster of magnets there a buy at the market you can buy at the market right on your stop right now is below 7even so you're risking 20 points but you trade small that means trade maybe 20% of your Normal size so if you trade one um e- mini 20% is two micro e minis are 10 Micro e minis for E Min and if it keeps going up you can add and if you

get a bear bar closing near low in this lower half you can get out below the bar if the market Falls the size of a scalp below the low of PR bar you can get up then we have a a higher low double bottom little trading Range High My Double top double bottom and we're Pausing some Bulls are taking profits at the measure move well we have a cluster of magnets a little bit higher so we're probably going to go higher can you sell um and scale in higher no nothing to sell bears are not

making money so you you do not sell until you see that bears are making money and bears are not making money so you do not sell yet when it's impossible for when it's Impossible for Bears to make Money traders buy and they use the appropriate stop and know the trade small enough so that if they get stopped out they don't lose any more on the trade than on any other trade let's say you're flat here let's say you don't hold a position and you're thinking oh my gosh I wish I was long I hope we

get a pull back so I can buy it um you know you just buy at the market put a stop below 7 and then if you get a Bear bar closing near it's low get out below the bar and if you get a bull bar closing near its high right afterwards you buy again above the bar can this be the high of the day can 89 be a bull trap and the high of the day um you know maybe 20% chance that that'll happen but you always have to wonder you know about you know how

how do I get out and as I Said if you get a bear bar closing below its midpoint get out below the Bear bar if the market goes the size of a scalp below the low of the prior bar then a bear could make money selling below that prior bar and you don't want to be trading this like a buy the close full Trend if the Bears can make money because if the Bears are making money it's no no longer a buy the Clos bull Trend it's a buy pullback bull Trend so you get Up

there are other things that Traders look at on um charts this is the daily chart and I can see on four dashed lines that's a 50-day simple moving average 100 day 150 day 200 day here we got near the 200 day and they block here we got near the 50-day and uh today they're buying here we pulled back to the 50-day and they bought but they didn't um keep buying we got a lower high and a second leg down and right now I suspect that if We go up we'll get a second leg down so

I think this will end up as a Head and Shoulder toop left shoulder head and then right shoulder big gap down you always hear that gaps always close and that is wrong gaps down always close well gaps up do not always close here's a gap up it's possible that never closes ever ever ever pandemic here's the Gap up it's never going to close down here 2900 that Gap is never going to close this Gap is never going to close these gaps are probably never going to close the Market's in a bull trend on the yearly

chart so it goes to New highs and pulls back to higher lows and this low is so far below where we are the Market's never going to fill back out but if you have a gap down 100% chance every gap down is going to close because the Market's in a bull Trend it's always going to make a New high and if it's going to make a new high it's going to um close those gaps so 100% chance this Gap is going to close the question is when is it going to close over the next a

few days or we going to come down here and then six months now we can close that Gap don't know we'll find out right now it's more likely um that we're going to keep going higher you know so far today's good day it's undoing a lot of yesterday um I think we're probably Going to get a lower high and an attempt at a higher low major Trend reversal when you get any kind of a major Trend reversal setup Head and Shoulders top big wedge on any of those things only 40% chance you're going to get

an actual major reversal into an opposite Trend so here we got a wedge on the daily chart 1 two 3 40% chance this is going to lead to a bare trend down to here down to here 60% chance it will not 60% chance it'll be Brief we keep going up or it will go sideways for a while still buy the close buy the market buy for any reason I'm going to get rid of this measure move basic upon this double top double bottom neckline measure move up the Market's ignoring it to ignore it have a

whole bunch of magnets here so even if we pull back for a bar or two we're still probably going to go higher this dash line is the 60-minute 20 bar Exponential moving average here's the 60-minute chart and that's it's a blue line here and I have it as a dash line here the reason why it uh keeps reversing on this chart is I wrote the average uh to calculate at the close of every five minute bar so here it gets calculated at the close of every 60-minute bar so once an hour here it's getting adjusted

12 times an hour is anybody selling here obviously yes because if you're Buying you're buying from someone that means someone is selling now why would anybody be so stupid as to sell if the Market's going up well there bun of reasons some of the sellers our Bulls are brought down here and now they have 20 points and they're taking their profits so you got Bulls selling and then you also have Traders trading on Tiny time frames computers people I'll put up a one minute Char right oh I got a wedge Toop I'm going to sell

right it's a one minute you know Traders two minute Traders um you know they bought and they take taking profits a scalp is five points on the F minute chart on a two-minute chart the scalp is going to be smaller in general a scalp is about the size of a bar so if you're on a FIV minute chart the average bar is about five points tall the scalp is probably going to be about five points if you're on a one minute chart Average bar might be two points tall and then the scalp is two points

if you're on a 60-minute chart the average bar might be 10 or 20 points tall if you're looking to scout exit within a bar or two you're looking to make you know 20 points if you're on a daily chart and you're looking for a quick trade you know you stop it might be below a prior bar if you're long right and so you want to make about that much So fast money Trader on the daily chart is looking to make about the size of an average bar the bodies are shrinking 8 9 10 and 11

but it's still a lot of Mo bars this is 12 it determines the appearance of the first 60-minute bar and so far it's a big bull bar closing the UN eye closing far above the high of the fire bar and reversing most of yesterday's is Big sell off so it's a very good bar we're probably going to get to the 60-minute moving average either today or early next week it's possible we just go up and then do this big bu bar and then this and then get some resumption up next week so we're going to

go higher you know we're probably going to get to the 60-minute moving average either today or on Monday or Tuesday we can get there by going up by going sideways for a lot of bars less aggressive bars are getting smaller but still more buying than Selling only had one be 12 bars into the day and only one Bear bar so do you want a short no you know every every bar is owned by the Bulls so it's foolish to Short does the market have to stop at this resistance no but it probably will why because

very often if there's important resistance here we have you know a whole bunch of stuff all together um you know last week's slow you got this measure move the pink line you got The measure move the green line you have the 60-minute moving average you have yesterday High um you have a whole bunch of um resistance here and now we have a bigger Bar Bar Bar 12 the market reached up to grab that resistance um so we're probably not going much higher um this will attract um profit takers Bulls sing out of Longs so Bulls

are going to be pretty quick to get out so what happens can today become a bare Trend no um well I shouldn't say no 20% chance they will become a bare Trend so 80% chance it's either going to continue up not likely or enter a trading range likely so whenever the market races up on the open a lot of points so we're already the size of an average day here's the daily chart and look at the size of today and then look at these other days to is already about as big as those other days

so today's probably not Going to get much bigger and therefore we're probably not going to go much higher but it's very strongly bullish the first 12 bars we only have one Bear bar so we're probably not going to go down very far you know can we get down to the bottom of this F climax I maybe 30% chance will come down here at some point today and maybe um maybe there's a 20 or 30% chance that we'll get 30 30 points above where we are but most likely we Going to start to enter a trading

M I'm going to turn the screen on for a moment I have a collection of slides every day I create charts I've been doing this for 40 years now almost 40 years okay so this is what today's probably going to do a gap up in a bull trend from the open and then a trading range so very strong bull trend here it lasted all day 20% of the time you get a really strong bull Trend it just keeps going up and up and out 20% of the time You get a really strong bull Trend and

it reverses 60% of the time if you get a really strong bull Trend it just reaches its Target and then go sideways around that Target so 60% chance that they is soon going to start to do this normally the rally ends before the end of the second hour so there's probably very little left to the rally if we go up at all really strong rally and then this Big Bear bar but only a Couple bear bars all day probably a minor reversal so this is probably for at least the next couple hours we're probably going

to do this and probably we're going to be doing it all day the Bears are hoping that a very big buy Climax and they're not expecting a bear Trend right away but they're hoping that we go sideways for a couple hours and form a double top or a lower high and then later in the day get a reversal at the moment 20% chance we're Going to get a big reversal later in the day and that means um 80% chance for not you can see Big bullbar 12 um the Bars were shrinking shrinking shrinking and pop

big bull bar up into that zone of resistance a lot of bulls are taking profits because they know we're probably not going to go a lot higher um and um they have big profits so and their stop is down here so it doesn't make sense if there's only A little bit more profit potential and the risk is much bigger than the reward maybe take some partial profits or full profits if you have not exited yet I would get out below a bear bar closing below its midpoint like 13 um or you can get out the

size of a scalp high points 22 ticks below the low of any bar but the day is pretty much over right now probably probably um this is probably in the next couple of hours Possibly for the rest of the day we're going to do this can you short below 13 arguing well it's probably trading range and therefore I can sell if it goes up I can sell more higher um you know if you're a computer if you have a big account you can do that but most Traders should not sell below 13 except to exit

Longs really important thing right here bar 12 a big bullbar closing near as high It's the final bar of the hour and It's a bit very big bull bar and Traders always want to see what's above a very big bull bar so a lot of times you'll just go a tick or so above the prior bar and get profit takers and you can see 13 went just a tick or so above 12 and Traders took profits so instead of buying the breakout above the big bull bar um they sold so a lot of times you

get a big bull bar and here we sold off for three hours but not all that much the day just Went sideways big bullbar and then we did that can you buy the close of 13 well like I said you could sell below 13 and sell more higher and you can buy the 13 low and buy more 5 10 points lower right but at this point it's probably better to let the market go down for a couple small legs and then look to buy again and for the Bears it's better to wait for a second

reversal down so wait for some kind of a double top and then Sell we are probably in a trading range right now and we might be in the middle of it if this is the middle of it then the bottom of it is somewhere down here big big bu climax a big magnet down here big big cell climax yesterday big big magnet right there you know theoretically shs were short put their stop above the top of the most leg down especially if it's a cell climax Bulls Who are long a lot of them put their

stop one take below the bottom of the bimax or one tick below the bottom of that HS the bimax so there are a lot of bulls bull computers that will sell down here and bears are trying to get it down there does this sell the clo sell the market we're in a trading range and um we're probably not going to go down all that far trainy ranges tend to be confusing and a lot of times it's better To wait for second buys and second sells SO trading range here um first reversal um five bull bars

better not take it wa for a second cell below that bar or below that bar and then here TR reverse up you have four bear bars I don't want to buy the first reversal up even though it's the bottom of the range I'll wait for maybe a second or third or fourth reversal up and buy or if I do buy I'll use a wide stop and buy more the size of the scalp lower or buy more If there's a second or third um buy now I said it's reasonable for Bulls to get out the size

of a scalp below 13 well guess what it's also reasonable for Bulls to buy the size of a scal below 13 um they'll bet that this reversal down is minor because 80% chance it is minor 80% chance this is a pullback in what would become a trading range so 80% chance we've begun a trading range or this is a brief pullback and we get another leg up so Maybe one pullback two pullback three as I said only 20% chance we're going a lot higher only 20% chance we're going to reverse down to the low and

60% chance we're going to be doing this for at least a couple hours then the Bulls will hope for so big rally trading range for here two or three hours the Bulls want the bull Trend resume the Bears want the bear Trend the Bears want reversal so this is the next couple of hours here this is like 3 hours this is Like 3 hours but this is what Traders will look for either Trend resumption up or Trend reversal down but most likely we're going to be sideway for the rest of the day most likely we're

not going to do that most likely we're not going to do that most likely we're just going to stay side raise all day huge rally sideways um this is not nearly as bigger rally but here big legs up and down sideways here big big rally a lot of Bear bars and basically sideway for a couple hours sideway to couple hours a little bit of trend resumption up here sideways to down big ra big rally trading range tring to get resumption up they failed big big rally and then that I have lots of examples of it

and why do I have so many examples because it's really common to get a big big Trend and then a trading R big Trend trading R they have lots and lots of examples Here big Trend trading range resumption now see all the examples I lots and lots and lots of examples no matter how strong the trend is slways for at least a couple hours now when does this become uh sell the close when does it become so bearish that you cannot deny that it's going down no not yet we're not even at a 50% pullback

yet remember I told you buy Climax the bottom of the bu climax is Um a Target okay there's a 50% retracement so there'll be some buyus here I'm going to get rid of this measure move for the time being now we're wondering about how far down the reversal will go where is the bottom of the trading range is it around where we are now or is it all the way down here when bears start to sell at a minimum they want to see at least two bars 13 14 so you might get some bear Selling

here 15 but I think it's it's better not to sell because the training range is more likely than a big be Trend so what happened to all the bullishness you know the Bulls B because they were confident that there were so many magnets up here so much resistance we had to come up to that area and test it and we did and so the Bulls sold they got what they wanted they got up to that area and they don't want to buy any more Except lower trading range Behavior big up big down creates big confusion

you know wait a minute first 12 bars we only had one Bear bar that's Su really bullish yeah but it's also a bu vacuum test of resistance so that does not mean bulls will buy forever once you've corrected about 70% of a rally um you're usually going to get down all the way down so we're probably going to go down to around the eight Low nothing to do here if you're flat I would not sell just like up here I said well Traders might take profits here the Bears going to be taking profits at the

moving average we're back at the breakout point and we're near the bottom of the B climax so a lot of bulls will look to buy around the eight low the seven low so somewh a little bit lower some are buying at the moving average and for the Bears um I I think we're in the trading Range and um you don't want to be selling too low and this is I think too low I'm going to turn the screen off this is my encyclopedia a collection turning it into a book and probably about 70% done with

a book okay big up big down big confusion likely trading range big up big down everybody's wondering what the heck is going on you know and that's what Follows big up big down here we reversed back up again we never went all that far up and here we were sideways for several hours big up big down uh we rallied but basically a trading range day those are hoping that we're going to do this what they need a bullar or two bull bars if they get bulls will start to buy again now I said there was

a 20% chance this could become a bare Trend I'm going open another PowerPoint by cles sometimes the rally there big rally and the market just reverses down all day but if the rally is um as big as today's was you know the chance of that you know big big rally and be Trend you know the chance of it is 20% okay so Traders are buying here using a wide stop and they'll buy more lower but because we're probably in a trading range a lot of the Traders buying are looking for scalps five or 10 Points

and um just like the Bulls were selling here not buying the Bears are buying here not selling the Bears are sold below 13 or 14 or the close of 15 um they're buying back shorts for Five Points nobody is pressing bets nobody is selling selling selling selling up big down big confusion probably a trading range and trading range you don't want to sell too far down from the high so bulls will start to look to buy Around where we are and they'll buy more or lower probably sideways for a few bars here as Traders decide

are we're going to get below the eight low or we going to hold above it and work back up to the high so is the bottom of the trading range here or is it a little bit lower down here is there anything 16 can do that makes you want to buy well if it's a huge bullbar closing Near tie it's a buy but the Bears have done enough damage to make a bull Trend over the next couple hours unlikely so anybody buying is scalping and a lot of the buyers will use wide stops and scale

in so here we have this big sell off and Traders are buying bears are buying back shorts okay some Bulls see this rally and they put their stop one take below the Bon X eight or One take below the bull leg seven and they're defending their stops we're getting near their stops so they're buying again prevent the market from getting there they know that a lot of bears will be hesitant to sell too low so they know you'll be getting fewer Bears and the bulls have a better chance of um you know getting a bounce

here we got a bull reversal R 16 we're going down why because it's not a strong buy and the Bears are betting That uh they can get down to this area so bear scalpers are selling a close of 16 confusion Hallmark of a trading range whenever you look at something and say it's pretty bullish and this is pretty bullish wait a minute that's bearish you know whenever there's confusion the market is probably going to go sideways and the reason for that is if Traders are confused they don't want to be buying too high and they

don't want to be selling too low so they Tend to buy low and sell high and they're confused they don't think the Market's going to go very far before reversing and therefore they take quick profits so confusion leads to Traders buying low selling High taking quick profits and when Traders do that the market enters the trading range back at the moving average again they bought 15 at the moving average they bought 16 and now 17 remember we're probably not going to go down much from Here the Bulls are deciding Traders are deciding whether we're going

to get below seven and eight and then go up or are we going to go up here that those are the two decisions less likely we break strongly below seven and then go down to the low of the day maybe 20% chance we just collapse 80% chance either we go up from where we are we go down a little bit more maybe to this breakout coin and then go Up p is short below 17 betting that we're going to come down a lot further remember I've said only 20 % chance we're just going to keep

going straight down and we're also right around 20 points below 13 and a lot of Traders look for a scalp of Five Points and a swing trade of 20 points and so a lot of the Bears Who Sold below 13 they're trying to scal out with 20 points which is right around Below of 16 Bulls trying to get a micro double bot down on 16 up on 16 down on 17 up on 18 we're down a lot so this is an area where it's better to be looking to buy not sell probably more buyers than

sellers 17 low 16 low seven low so this is a buy Zone down here just like that was a cell Zone scalloping mode Buy Low sell High scallop this is kind of um tricky if you Have a small account you know it's easier to trade this stuff if you can scale in and use wi stops which I think you can't do if you're if you have a small account so even though it's a buy Above 16 for a scalp up um I think it's really not a great a great buy from most Traders better of

weight we have an inside bar of 17 and so far second one 18 and the easiest trade would be for if it to go above 18 and then below and Then reverse up a second time that would be a higher probability bet and for the Bears I think you should not be selling down here is this byy the Clos again traders who buy are scalping so there'll be sellers buy points above 16 think that I'm going to do that and we might but as I said even if we do it's still going to result in

we'll see a trading Range the bows are bought about 16 taking profits I did buy I did take profits and back to flat and what do I do if it keeps going up I think we're in a trading range so I only want to buy low I don't want to be buying High I want to buy pullbacks the Bears can they sell here are we high enough to sell um I would not 18 is a surprisingly strong bullar so we'll probably have at least small Second leg sideways to up so if we're going to get

a small second leg sideways to up I'd rather wait to see what the second leg looks like and then think about selling I want to say something about what place here I bought in the stop one tick about 16 and I had one tick slippage um so I'm not going to scalp Five Points from my entry I'm going to scalp Five Points from um my Order so I did not try to scalp out with five points from my actual entry price I scalped out five points from one tick above 16 and it went up 22

ticks and pulled back so I was able to get out so I made one tick less I made 19 ticks instead of 20 ticks now I said this was a buy the close rally reasonable to buy the close and therefore it was reasonable for Vols to buy 12 although I said that probably would be more profit takers There so what happens so let's say somebody did the reasonable thing and they bought the clothes there 80% chance that bull is not going to lose money if he can use wide stops and scale in lower so what

he does is he buys the close uses a wide stop maybe down somewhere down here waits for a Boulevard closing the side and buys above the high of that bar 80% chance The Market's going to get to the midpoint of his two Buys so he bought that close and then he bought one takeable above that 80% chance it's going to get one tick above that pink line I don't have this drawn in precisely it's um pretty close so 80% chance we're going to go tick above that line and 60% chance we're going to get all

the way up to That close um 16 is not a strong bycle bar so a lot of bulls who bought the 12th close theoretically did not buy Above 16 and 18 is too far to buy so they'll wait to see if we get a better bullbar somewhere down here if a bear sold the close of 16 disappointed excuse me sold the close of 15 disappointed 16 they had an opportunity to get out break even on 17 and 18 the Bulls B 12 disappointed 133 They never had an opportunity to get out without a loss so

some of those bulls will use a wide stop and wait for a bullar closing near its high reversing up from the bottom of a sell off and buy um more probably more buyers than sellers 19 low so I would not take that short and I still think we're going go above that pink line is it by the close or sell the close I think we did not go up high enough So I think it's by the close the one problem the Bulls have is the body on 16 was not as big as they wanted so

some of the scale in Bulls bought the 12 Clos did not buy Above 16 I just turn the screen off and open another Power Point again this is from my encyclopedia slides doesn't this look familiar looks like today r that accelerated up and the bus of bought to close disappointed by that Bar aren't aable to get off break even wait for a b bar closing near its high and then they buy more we fell below the bottom of the black Linx and still Bulls what above the bullar closing near it's high 60% chance that get

all the way back up there they can get out break even on their first buy with a profit on their lower buy and 80% chance it'll get to the midpoint I want this Line to be one tick above that bullbar and then let me shrink that by half by the Clos rally they buy the close buy the close buy the close and the final buy the close bar if you're disappointed by the next bar and it doesn't go sideways to allow you to get outbreak even if you wait for a bullar closing near its high

80% of the time you'll get to the midpoint and you can get outbreak Even 80% you can get to the midpoint you can see there were sellers there and in 60% you get to the original Buy and you can see today 80% chance we were going to get to the midpoint of the two buys by the close by more here than we did and 60% chance we get all the way back up there so the bull who bought that close bought more above that bar 60% chance it's going to get back up here and he

he can get a break even on his first buy and With a profit on his lower Buy this selloff created a problem for the Bulls um made it unlikely that we're going to go a lot higher today so we still make it up to the 60-minute moving average but the pullback is so deep that it's more likely we're in a trading range the top of the range might be above this High the bottom of the range might be below this low but it's likely that on The next couple of hours were sideways so it looks

like not a lot of bulls exited at the midpoint of their two Buys so that means there are a lot of bulls who believe we're getting back up here where the Bears to short they need a pretty good looking Bear bar so um you know pretty good looking Bear bar you know decent Siz Bear bar closing there it's SL you know you look at that and you say oh Gosh it's disappointing I was hoping we'd get a gap above 19 and what for measure move but big up big down creates big confusion and when Traders

are confused they only want to buy low they want to sell high and they want to take quick profits they don't want to buy high they don't want to sell low and they stop swing trading so we're probably in a trading range this could end up as a triangle lower high higher Low then more sideways over the next couple hours but probably sideways for at least a couple hours possibly all day and if we do break out up or down we're probably not going to go very far either way so we may go up a

little bit more may go down a little bit more but today is probably going to be mostly a trading range for the remainder of the day what happens if we start doing this again well then I'll change my mind what happens if we get another Series that looks like that then I'll change my mind on the downside but right now 60% chance inter tring in for at least a couple hours for the bear is a lower high major Trend reversal it's a wedge on a smaller time frame we're up on 16 down 17 and then

up and down and up let's look at a one minute chart so three legs up one pull back two pull back three probably we'll get a couple legs down this is a war minute Chart but that's so bullish it's unlikely we're going to go straight down confusion Big reversals Lots of reversals you don't know where the Market's going to go disappointment you get a big bear bar 20 reverses off you get a big full bar 21 it reverses down those are the two Hallmarks of a trading range so what about selling below 22 I think

if you can use a wide stop you can do it so if you sell Below on 22 you know maybe you put your initial Stop above 22 I probably would put it way up here that means trade small if it goes up you can sell more right now it looks like a good-looking Bear bar but we still have 15 seconds remaining and it may not look so bearish when it closes another thing that happens with training range trading goodlook bars become less good-looking in the final you know minute or so like here so nobody's going

To sell below 22 despite a wedge rally to a lower high double top a bad cell signal bar if 23 excuse me if 23 is a be bar closing nearest low Traders might sell below that but nobody's going to sell below 22 it's going down who's selling Bulls Bulls who were hoping it was going to get to the 12 close are selling to get out Break Even between their two buys at that pink line remember 60% chance we're going to Get to the 12 close before the end of the day if we friend down strongly

then no longer 60% but at this minute 60% chance we're going to get up there by the end of the day here it took three hours to get back to that close but the market did get there very strong rally by the close wait for bulwar closing near its sign to buy more what about this well you want the second Buy to be at least twice the size of a scalp below the first bar so you buy more here and the average price is right there and you can see we just went barely above that

midpoint and the Bulls have bought that close and bought more one di above that while they it off break even another example got down below the bottom of the buy Climax and at the end of the day we got back to that close strong rally down and then down Couple hours later back to that close later in in the day we got a big reversal down by the closed rally Bears disappointed but excuse me the Bulls disappointed by that bear bar but a lot of them decided to try to get out around Break Even they

placed a limit order around the close of that boulevar and it they got closer to their order so some of them get out and the others looked at this and said uh oh micro double top I'm Going to sell below that bar or below this bar the neckline the mic to expecting more a pull back Bulls buying below of 22 looking for at least a third leg up we have three legs up up on 16 and then down up down up but we have a way Ed but 18 was strong enough 1819 so it could

start the count over again so it be one pull back two pull back three plus we have that magnet here and we have all these other magnets as Well the measure move based upon yesterday cell climax the bottom of the cell climax the top of the cell climax that pink line we have yesterday's high that red line we have the 60-minute moving average there we have last week's low we poked above last week's slow and sold off on the weekly chart here they broke below last week's low and we're right around last week's slow the

Bulls are trying to get above last week's Low there's another Target that I don't have to draw in here we thr up a a 15 minute chart and I'll draw it in know it we'll get there but I'll put it in anyway today's Friday and we're probably not going to close at the low of the week we're not going to close at the high of the week um and when the Market's not going to close at the high or the low of the week what it often will do is try to Close in the middle

of the week and this is the high of the week that's the low of the week and this is the midpoint of the week and so that is another magnet let me go back to the 5 minute chart it's another magnet in that same cluster of magnets and that's just another reason why Market probably is going to try to get up here at some point today A high one buy so a bull Trend a pullback but a dogee bar near The top of a trading range you only buy that if you can use a wide

stop scale in and be patient even though I think we're going to that close and we're so close to those other magnets I think we're probably going up here um can you buy Above 23 for swing buy about 23 and then look for a 20 point move up to here you know I would know I think we're in a trading range and I think it's better to scalp and a lot of the scalping is with Limit WS you buy the low of 19 you buy the low of 22 and you don't AR be buying with

stops too high up especially when we're getting a lot of sideways overlapping bars four bars here and four bars here small type trading range is not good for stop order Traders low double bottom 16 and seven but this sell off is deep enough to create a lot of confusion and it makes it more likely that we're not going to go up Here and then this rally up and down up and down up and down up so you know I think we're going to go a little higher I do not think we're going to go a

lot higher I think we're probably going to be in a trading range for at least a couple hours so if the rain started Around Bar 12 13 so at least until bar 36 I think will be mostly sideways the range might be small up here they may come all the way back down Here again one of the reasons why it might not come down here again is sell the Clos Bears 15 disappointed 16 we're able to get out Break Even 17 or 18 so there's less reason to come back down here we've already tested um

the 15 close we've tested the B climax slow we tested moving average several times but we have not tested the 12 clothes that's why I think we're going to go at least a little bit higher it's not a buy the Clos rally It's a buy the pullback type of rally so I would not buy up here a lot of bulls will be scalping so the Bulls are both the 202 low get their Five Points and they'll sell the Bulls who bought the 12 clothes and who sat through all of this this they will sell around

here there are other Bulls who bought here thinking we'd reach all of these magnets they're going to sell up here as well so the Bulls need a strong break up Above all of this if we're going to go a lot higher and chances are it's not going to happen Okay I'm going to step aside I hope you all have a good day