3 Patterns Every Trader and Investor Should Know Flashcards
Price Action
Price Action
TRADE ALL MARKETS THE SAME ! Look for Patterns (Price Action)
TRADE ALL MARKETS THE SAME ! Look for Patterns (Price Action)
What are 3 common Pattens?
BO, PB, Reversal
Small PB Bull Trend - Many Bull Bars Closing on Their Highs
Small PB Bull Trend means PBs are shallow & usually on last a few bars
Strong Bull BO on Higher TF
ONLY BUY
Unusual so unsustainable and a Buy Climax, Bulls will keep Buying until Reversal
Many see strong Rally & cannot figure out how to get long, they are afraid to have a WIDE Stop far below, it is better to Buy on a Stop above H of previous Bar
Trade Small and use correct Stop OR, Buy option Calls(lower risk trade)
RAISE STOP AFTER EACH STRONG BO
Small PB Bull Trend - Many Bull Bars Closing on Their Highs
Small PB Bull Trend means PBs are shallow & usually on last a few bars
Strong Bull BO on Higher TF
ONLY BUY
Unusual so unsustainable and a Buy Climax, Bulls will keep Buying until Reversal
Many see strong Rally & cannot figure out how to get long, they are afraid to have a WIDE Stop far below, it is better to Buy on a Stop above H of previous Bar
Trade Small and use correct Stop OR, Buy option Calls(lower risk trade)
RAISE STOP AFTER EACH STRONG BO
Small PB Bull Trend: Many Small Bodies & Prominent Tails
Bars are small and tails are prominent but PBs are shallow & only lasting 1-3 bars
Looks like will soon convert to TR but never does
MANY GAPS, Sign of EAGER BULLS
ALL Bull Trends constantly form wedge Tops, they usually fail and create small PBs
Better to ONLY BUY!
Small PB Bull Trend: Many Small Bodies & Prominent Tails
Bars are small and tails are prominent but PBs are shallow & only lasting 1-3 bars
Looks like will soon convert to TR but never does
MANY GAPS, Sign of EAGER BULLS
ALL Bull Trends constantly form wedge Tops, they usually fail and create small PBs
Better to ONLY BUY!
Small PB Bull Trend = Buy for ANY reason
Buy above Bull Bars in a PB
Buy Close of Bull Bar Closing Near its Highs
Buy Bear Closes
Buy @ EMA
Buy Below Prior Bar, especially if Bull Bar
*After each BO to a new High, raise stop to below bottom of that leg up!
Small PB Bull Trend = Buy for ANY reason
Buy above Bull Bars in a PB
Buy Close of Bull Bar Closing Near its Highs
Buy Bear Closes
Buy @ EMA
Buy Below Prior Bar, especially if Bull Bar
*After each BO to a new High, raise stop to below bottom of that leg up!
High 1 Bull Flag: One Small Leg Down in Bull Trend or TR
High 1 Bull Flag: One Small Leg Down in Bull Trend or TR
High 2 @ TR Top - 2 Legs Down in Bull Trend/TR
High 2 @ TR Top - 2 Legs Down in Bull Trend/TR
Wedge Bull Flag - 3 Legs Down in Bull Trend/TR
*In a High 1/2/3 Trade Buys above a Bull Bar increases the probability of the Trade
Wedge Bull Flag - 3 Legs Down in Bull Trend/TR
*In a High 1/2/3 Trade Buys above a Bull Bar increases the probability of the Trade
H1 & H2 & H3 Buy Setups - PB in Bull Trend/TR
H1, H2, and H3 are PBs in a Bull Trend or TR
Beginners should look for STRONG BULL TREND
*Higher probability of profit when buying above bull bar that closes near its high
*Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup(H1 Bull Flag)
H1 & H2 & H3 Buy Setups - PB in Bull Trend/TR
H1, H2, and H3 are PBs in a Bull Trend or TR
Beginners should look for STRONG BULL TREND
*Higher probability of profit when buying above bull bar that closes near its high
*Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup(H1 Bull Flag)
Is every DB a H1 or a H2?
Every DB is a H2
H1 Bull Flag - *Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup (H1 Bull Flag)
H1 Bull Flag - *Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup (H1 Bull Flag)
If Bears Twice try to selloff and fail, they will give up, it creates a High 2 Bull Flag (H2)
Buy above Bull Bar since bears will Exit with a LOSS
If Bears Twice try to selloff and fail, they will give up, it creates a High 2 Bull Flag (H2)
Buy above Bull Bar since bears will Exit with a LOSS
Big High 2 Bull Flag - Opening Reversal Up from EMA
Big High 2 Bull Flag - Opening Reversal Up from EMA
a Wedge Bottom = a Sell Climax; it usually ATTRACTS Profit Taking and Bulls will Buy for a Swing Up
a Wedge Bottom = a Sell Climax; it usually ATTRACTS Profit Taking and Bulls will Buy for a Swing Up
Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax
Having at least one OVERSHOOT in the Wedge is GREAT for the Wedge Context
Bears who Buy Back shorts typically wait for 2 Legs up before selling again, they give bulls a chance to create a Trend Reversal
Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax
Having at least one OVERSHOOT in the Wedge is GREAT for the Wedge Context
Bears who Buy Back shorts typically wait for 2 Legs up before selling again, they give bulls a chance to create a Trend Reversal
Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax
Reversal up from Wedge Bottom usually has 2 or more legs up
Big Bull Bar late in Bull Trend is a Buy Climax
Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax
Reversal up from Wedge Bottom usually has 2 or more legs up
Big Bull Bar late in Bull Trend is a Buy Climax
More Ways to Draw a WEDGE BOTTOM the more likely I will get a Reversal Up.
This is because the more computers thinking there will be a reversal up due to these wedge bottoms the MORE LIKELY the reversal up will occur.
Even though they’re different ways to draw the Wedges the bottom is the same for ALL again this increases the chances of a Reversal up
More Ways to Draw a WEDGE BOTTOM the more likely I will get a Reversal Up.
This is because the more computers thinking there will be a reversal up due to these wedge bottoms the MORE LIKELY the reversal up will occur.
Even though they’re different ways to draw the Wedges the bottom is the same for ALL again this increases the chances of a Reversal up
The market often transitions into a new Trend before old Trend Ends
The market often transitions into a new Trend before old Trend Ends
Wedge Bottom - Strong Buy Signal Bars
Assume 50% Chance BO below wedge bottom will fail and there will be a reversal up
and a 50% Chance the BO will succeed and there will be a trend resumption.
If stopped out, you can look for another bottom to Buy
Wedge Bottom - Strong Buy Signal Bars
Assume 50% Chance BO below wedge bottom will fail and there will be a reversal up
and a 50% Chance the BO will succeed and there will be a trend resumption.
If stopped out, you can look for another bottom to Buy
Nested Wedge Bottom - Exhaustive Sell Climax
Biggest Bear Bar late in Bear Trend in confluence with 2 Wedge Bottoms(Making it a Nested Wedge)
Nested Wedge Bottom - Exhaustive Sell Climax
Biggest Bear Bar late in Bear Trend in confluence with 2 Wedge Bottoms(Making it a Nested Wedge)
Wedge Bottom - Wait for Good Buy Signal Bar
Wedge Bottom but bad initial Buy signal Bat and consecutive Bear Bars
Wait for PB from 1st reversal up & buy above a bull bar closing near its high
Many Bull bars Closing near their Highs this means Buying Pressure is increasing = Increases Chances of market going HIGHER
Wedge Bottom - Wait for Good Buy Signal Bar
Wedge Bottom but bad initial Buy signal Bat and consecutive Bear Bars
Wait for PB from 1st reversal up & buy above a bull bar closing near its high
Many Bull bars Closing near their Highs this means Buying Pressure is increasing = Increases Chances of market going HIGHER
Wedge Bear Channel - can Be Bull Flag or Bull Trend Reversal
Wedge Bear Channel - can Be Bull Flag or Bull Trend Reversal
Strong 2nd Leg - Might Be New 1st Leg
Wedge Bottom, but 6 consecutive bear bars
No good Buy Signal Bar; minor reversal up is likely
Wait for better bottom to Buy
Strong 2nd Leg - Might Be New 1st Leg
Wedge Bottom, but 6 consecutive bear bars
No good Buy Signal Bar; minor reversal up is likely
Wait for better bottom to Buy
If the Market is in a Strong Bear Trend it will always be forming Wedge Bottoms and I should not be looking for Reversal UP
If the Market is in a Strong Bear Trend it will always be forming Wedge Bottoms and I should not be looking for Reversal UP
Many Strong Bull Bars - Better Chance of Reversal Up
Many Strong Bull Bars - Better Chance of Reversal Up
In TRs patterns often look bad but they can still be Tradable. Wedge Bottom can indeed look as though it is bad shape in a TR but still be effective
In TRs patterns often look bad but they can still be Tradable. Wedge Bottom can indeed look as though it is bad shape in a TR but still be effective
Tight Bear Channel - Only LOOK TO SELL!
There is a Wedge Bottom but The Tight Bear channel means Small PB Bear Trend THEREFORE Only Look to SELL!
Tight Bear Channel - Only LOOK TO SELL!
There is a Wedge Bottom but The Tight Bear channel means Small PB Bear Trend THEREFORE Only Look to SELL!
Tight Bear Channel - Only LOOK TO SELL!
There is a Wedge Bottom but The Tight Bear channel means Small PB Bear Trend THEREFORE Only Look to SELL!
Tight Bear Channel - Only LOOK TO SELL!
There is a Wedge Bottom but The Tight Bear channel means Small PB Bear Trend THEREFORE Only Look to SELL!
Wedge Top - PB from 1st Leg is Usually Right Shoulder of HST
Nested Wedge in this Wedge Top increases the odds of the bears Creating a Successful Reversal
Whenever I get a Wedge and than a LH it is also a HST (were the Left Shoulder is the 2nd leg up in the wedge and I am expecting a 2nd Leg down)
Wedge Top - PB from 1st Leg is Usually Right Shoulder of HST
Nested Wedge in this Wedge Top increases the odds of the bears Creating a Successful Reversal
Whenever I get a Wedge and than a LH it is also a HST (were the Left Shoulder is the 2nd leg up in the wedge and I am expecting a 2nd Leg down)
Wedge Top - After 2 Strong Legs Down
Wedge Top - After 2 Strong Legs Down
Wedge Top - Often has 4 - 5 Legs Up
Sell Reversal down from Top of the Wedge
If I get stopped out and the premise is still valid look to SELL again
Consecutive Tp[s have higher Probability
When a Wedge has a Strong 2nd Leg up, many Computers start count over again
However if I think there is to much Buying Pressure stay out of the Trade; When in Doubt Stay Out
Wedge Top - Often has 4 - 5 Legs Up
Sell Reversal down from Top of the Wedge
If I get stopped out and the premise is still valid look to SELL again
Consecutive Tp[s have higher Probability
When a Wedge has a Strong 2nd Leg up, many Computers start count over again
However if I think there is to much Buying Pressure stay out of the Trade; When in Doubt Stay Out
Every Strong Bull Trend is constantly doing what?
Every Strong Bull Trend is constantly forming Wedge Tops that FAIL
Most if not ALMOST all MTR Reversal begin with a Wedge Top or Wedge Bottom
Most if not ALMOST all MTR Reversal begin with a Wedge Top or Wedge Bottom
Wedge Bull Channel - Failed BO Above
BO above Wedge Top has a 50% chance of a swing up
And, a 50% chance of a Reversal down, like here on this chart
Wedge Bull Channel - Failed BO Above
BO above Wedge Top has a 50% chance of a swing up
And, a 50% chance of a Reversal down, like here on this chart
Tight Bull Channel - DO NOT SELL WEDGE TOP
The Tight Bull Channel has way to Much Buying Pressure to take a Short Trade
Every Strong Bull Trend is constantly forming Wedge Tops that FAIL
Tight Bull Channel - DO NOT SELL WEDGE TOP
The Tight Bull Channel has way to Much Buying Pressure to take a Short Trade
Every Strong Bull Trend is constantly forming Wedge Tops that FAIL
Wedge Top - Often has a Teat of High and Forms a DT
75% of the time Bull Channels (aka Wedge Tops) have a Bear Break and the BO usually leads to a minor reversal before it evolves to a TR or Trend Reversal
Wedge Top - Often has a Teat of High and Forms a DT
75% of the time Bull Channels (aka Wedge Tops) have a Bear Break and the BO usually leads to a minor reversal before it evolves to a TR or Trend Reversal
Parabolic Wedge Top - Endless PB, Then Bear Reversal Day
*3 Pushes up in a Tight Bull Channel is a Parabolic Wedge Climax Wedge Channel and a BUY CLIMAX (this attracts profit taking and sometimes forms a reversal down!)
Parabolic Wedge Top - Endless PB, Then Bear Reversal Day
*3 Pushes up in a Tight Bull Channel is a Parabolic Wedge Climax Wedge Channel and a BUY CLIMAX (this attracts profit taking and sometimes forms a reversal down!)
Truncated Wedge - 3rd Leg up Did not Make a New High
Truncated Wedge = 3rd Leg up does not go above 2nd leg up but there are still 3 pushes up; This can also be viewed as a DT
Truncated Wedge - 3rd Leg up Did not Make a New High
Truncated Wedge = 3rd Leg up does not go above 2nd leg up but there are still 3 pushes up; This can also be viewed as a DT
What is a Truncated Wedge?
3rd Leg up does not go above 2nd leg up but there are still 3 pushes up; This can also be viewed as a DT
