Video 15 A, B, C, D, E, F, G and H: Breakouts Flashcards
A Breakout is _________________________
A Move beyond any support or resistance
Al’s 80% Rule:
Markets have inertia and resist change. 80% of breakouts fail. (A reversal is a breakout)
Only __% of bars that are in a strong breakout, have follow-through.
10%
____% of bars, including trend bars, are in channels or TR
90%
Every _____ (on the breakout end) is a failed breakout attempt
Tail
__________ Bull Bars trap traders into buying high.
Strong
Bears will sell the ___________ of strong bull bars near top
Close
Strong Trends are always trying to __________
Reverse. After the breakout bar, bulls need at least one more big bull bar closing on its high to convince traders that a reversal will succeed. Bears will short any strong bull bar near the moving average betting it will fail. 80% Rule of failure. A reversal attempt needs follow through.
Any side that has _________________ has high risk-reward (Big reward).
Low Probability.
Big Reward usually means at least 2-Legs.
The minimum goal after a strong breakout is…..
2nd Leg Up
Positives for a breakout above a tight trading range are:
Early in the breakout, bears will short the top of the range hoping it will fail.
Bull breakout closing on it’s high.
Follow through bull bar, with a close near or above the middle of the bar. Open above the trading range.
(In this example, it goes up for a measured move. At least as high as the trading range.)
Example of a Measured Move from a Tight Trading Range Breakout. Every bar that gets added to it increases the profit target. One of the profit targets is based on the breakout. From the start of the breakout to the close of the final bar of the breakout. Usually some kind of measured move up.
Even when something seems very certain and clear in the market, you always have to be ready for a ____________
Surprise. Nothing in the market is 100%. And most things are only 40-60% certain. Even when you think something is going to happen, there is a 40% chance it will mot happen.
2nd Leg trap: In a Trading Range (TR), 2nd leg often very strong, but usually a trap.
Unless there is a strong breakout and strong follow through above the range, it’s probably a 2nd Leg Trap. It traps bulls into buying high.
Example of Legs. What are the characteristics that make this sell-off not very strong? (on the left)
Bad Follow-Through
Lacking consecutive big bear trend bars.
Big Bear bar, tail on the bottom.
@nd leg accelerating downward with bear bars closing on their lows. Not big tails. Looks like market is changing from mark
Video 15D, 10:53. Sign that a Bull Breakout will be strong. About 20 points. Slide 9.
Video 15D, 10:55. Sign that a Bull Breakout will be weak. About 20 points. Slide 10.
Video 15D, 11:24. Sign that a Bear Breakout will be Strong. About 20 points. Slide 11.
Video 15D, 11:24. Sign that a Bear Breakout will be Strong. About 20 points. Slide 12.
Video 15D, 11:44. Sign that a Bear Breakout will be Weak. About 20 points. Slide 12.
Whenever you see a failed breakout, you have to be thinking….
Is the failure going to lead to an opposite trend, or or simply lead to a pullback (like a bull flag) and the trend will resume.
The first pullback after a strong bull breakout, there’s a high probability that there will probably be _________________
At least a small second leg Up. If the breakout is strong enough, there may even be a measured move up form the bottom of the breakout to the close of the last strong bar. The probability is high that the market (reversal) will fail.
Secondly, a Spike, then pullback, then channel leads to a Wedge top. This is a Good sell signal Bar. Good reward:risk for a reversal down to test the bottom of the channel. Afterwards, it ends up in a trading range.
Whenever I see a strong Bull breakout, I have to be ready for a _________________ and be ready for the ______________ to break to the upside.
Bull Flag
Bull Flag
Al recommends buying a stop just above the close of the bull bar on the pullback.
Whenever I see the biggest Bull Trend bar coming 20 or more bars into a bull trend, it is more likely an ___________________ move than an acceleration move into a n even stronger bull trend
Exhaustive
True or False: Most Buy or Sell climaxes are followed by Trading Ranges (TR)
True
Whenever I see a Bull Climax that is trying to reverse, I always think the target is _________________ the low of the buy climax bar
Below
When you get 3 Surprise Bear Bars in a Bull Trend, odds favor a trend resumption _____
Up. So minor reversal into PB (bull flag) is not a tend reversal
Most exhaustions do not lead to an opposite trend. They lead to an end of the …
Current Trend
