Trends: Video 14 A, B, C, D & E Flashcards
True or False: All trends are contained in channels?
True. May not be obvious to a beginner. Important to recognize it.
Major trend: Only 1-2 on the chart. Minor Trends are considered to be…
Swings
Legs and
Pullback
Can be many on ahcart
The bottom of a channel is…
Bull Trend Line
Top of Bull channel is a …
Trend Channel Line
Where do bull Swing Traders put their protective stop in a Trend?
Below the bottom of Bull Leg (Major Low). (Do not put stop below HL if last rally was not strong Bull BO)
Why are stop below pullbacks Bad Stops?
Because the trend can continue while wicking below a minor pullback low
When and where you raise your stop
if bull leg reaches new high, has big bull bars closing on highs, raise the stop to below this leg up. One bar is usually not enough. Especially if new high followed a failed breakout.
If market falls below prior Higher Low, it may converting into…
A trading range or Bear trend. But if it falls below a minor Higher Low, it may just be converting into a broader bull channel.
One of the Hallmarks of a Bull Trend are Bear Traps. Why?
Each reversal attempt holds above the previous Higher Low. Pullback staying above bottom of most recent bull leg. The bears buying back their shorts adds to the bulls buying. This is classically why Trends go on for so long.
Channel lines are rarely perfect, therefore…
Traders keep redrawing them.
How to find the bottom of a Trend Channel
Either use lows, or a parallel line. Drag it down to a bar creating a channel that contains ALL of the bars. Channels are rarely perfect.
In a Bear Trend, the top of the channel is the Bear trend Line. And the bottom is the…
Bear Trend Channel Line
True or False. Channels are rarely perfect. And I can look to sell the reversal down near Bear Trend line.
True
True or False: Protective Stops can’t be in my head, they have to be in the market
True.
Big Bar have the Highest probability for Profit. Therefore, what must I do?
Must buy, even if small. Buy the next bar at the market
The hardest thing for a beginner is…
Risk, so they a re always looking for the tightest possible stop. And always waiting for pullbacks. While they wait, the market continues to go up.
When Beginners see a pullback, they see…
A trend reversal. But it is only profit taking from the computers. Risk control creates pullback
Look at this trend. One and two bar pullbacks all the way up that don’t drop very far. Market keeps working higher. Sell signal bars don’t look all that strong. When bulls see these reversal attempts, they see a bull flag forming. And they are looking for a reversal back up. And the reversal down to be just a bar or two. Where will bulls buy?
With Stops above reversal bars. Beginner looks at it and says “that’s still too high for me to buy, I want more of a pullback.” What he should be doing is buying small.
All strong trends constantly create Wedges. Markets often reverse from Wedge Tops. What happens when you get a reversal in a tight bull channel like this?
The first reversal is minor, and the bulls will buy it. The beginner is selling just where the strong bulls are beginning to buy.
80% Rule is…
Trends have inertia. 80% of reversal attempts fail.
Define Nested Wedge
I think a wedge within a wedge.
Describe Rising Wedge Channel and Falling Wedge Channel (Answer is a picture)
What is the strongest type of Trend?
Breakout (BO). Al also calls it a “Spike”. It is also a Buy Climax and Gap. (Trends are either in a breakout phase or a Channel phase)
When you have an endless pullback, what finally happens?
The bulls give up and you get a pair of big bear bars closing near their lows and it usually becomes a measuring gap and the market falls for a measured move down.
Bear channel, whether bear trend, or PB in bull trend (bull flag), has _____ chance of a bull BO
75%. Typically when you have a spike and channel like this, you get the bull breakout and it tests around the beginning of the channel. Then you evolve into a trading range.
When there are signs of urgency, it’s a sign of a ____________. When you have a lot of ______ like this and a strong breakout lasting 1 hour, 25% of the time goes sideways for several hours the decides between _____________ or _______________
Strong Trend
Urgency
Trend Reversal Down or Trend Resumption Up
Describe a Bull Spike and Channel Trend
Big single bar spike, then bull trend.
When Al sees a Trading range that is half of the height of a usual days range, he assumes that today’s range like an average day’s range and ___________. Going up or down for a _____________________. Or a little down and up for a _____________. then you get a brief ___________, maybe 1-5 bars, then it enters another Trading Range
Double
Measured Move
Normal Trading range day.
Break Out.
When pullbacks drop below the breakout point, Al calls is a _________
Stair Step pattern. It is a sign of a weak trend, and the market will most likely enter a Trading range (TR)
A Tight Channel is _______ compared to a Breakout, but still a good set-up.
“Weak”. when it is a Tight Channel, trade it like a breakout. Only trade in the direction of the trend. It is a breakout on a higher time frame.
A Broad Channel is like a _________ that is sloped up. Trade it like a __________________. Most bars are in _______________.
Trading Range
Trading Range
Trading Ranges
Trade in Both Directions: BLSHS (Buy Low, Sell High, Scalp). Quick profits.
Gaps example: No overlap between the breakout and the pullback body. That is a sign of a very strong trend.
Signs that Trend is weakening.
When limit order buyers can buy low and scalp a profit, that means the trend is weakening.
A Wedge seems like a __________________
Reversal Set-Up (But need to confirm further along in the course)
What will Bulls (Bears) do when a 20 Gap Bar Buy setup do at the first Bear close below the moving average?
Buy the bear close betting that it’s a trap, and it usually is.
MAG means….
Moving Average Gap Bar
When you get Gap Bars in a trend that go on for several hours, the rally that follows the gap bars is __________________
Usually the final rally before the market attempts a Major Trend Reversal
One of the hallmarks of a small pullback trend is Gap formation. If you start to see Gaps, yet the bars don’t look particularly strong, the market is _____________
Stronger than you think
A tight bear channel will not reverse into a bull trend. Usually, the first breakout of a channel results in…
A minor reversal in a trading range or a bear flag. Rather than a bull trend.
