Video 16 A, B, C, D, E & F: Channels Flashcards
Breakouts are brief of any chart. Only __%.
10%. Trends and Channels make up the other 90%
Define Channel
Any collection of bars that can be contained within two lines.
When there are 2 choices for a line, one with an undershoot, and the other with and over shoot, which do I choose?
Choose the line with the overshoot. It usually shows the shape better. It highlights the pattern better and helps me see what the market is doing.
A channel is a type of bull trend. __% of the time a channel will evolve into a trading range.
75%. A bull channel is a bear flag and 75% chance you will get a break tot he downside. and turn into a trading range or bear trend. 25% of the time, I will get a bull breakout. And the market cycle starts over.
Traders trade based on what happens when the market reaches a __________
Line
The distance between point 1 and 2 have to be similar to 2 and 3 or else traders will…
Ignore the line
Computers will ignore line if space between 2nd and 3rd points is….
Too Big. If 3-5 times more bars after bar 2 and still no test (no bar 3), ignore the line.
Traders like to use major highs and lows for lines. Draw lines using highs and lows. Then draw 2nd lines as a parallel of the first line. Do this in order to…
See what the market does
70% Rule is that __% or breakouts fail.
70%. And a 30% chance that the breakout will be successful.
TBLT stands for…
Ten Bars, Two legs
A triangle is a channel where lines get closer together. they converge.
Lines can also Diverge
As soon as I see ___ reversals, draw a line across the highs to create a bear trend line
- The draw a line below to create a parallel channel.
When the mark is both in a bull trend and a bear trend, it is in a ___________
Trading Range. Even though making lower highs and higher lows. look where the trend begins and it will tell me whether in a bull or bear trend.
Whenever the market has three pushes down, it is some type of a _________
Wedge Bottom. (The market tried three time to go down, and now it has a reversal up. It’s a failed breakout)
When the market ignore a line, I will ignore it too. Don’t have too many lines on chart or else it will be difficult to see what the market is trying to do.
Define Nested Wedge
When there are two ways to draw the same pattern
I have to be thinking constantly while trading and drawing lines, because….
Nobody is going to pay me to just sit in front of a computer. And I have to be constantly changing my opinion.
When the bear trend starts before the bull trend has ended.
Can be last higher low inside a bull channel
Whenever you have pretty good buying pressure in a Wedge Bear Flag, late in a bear trend, it often becomes the _______________ before you get the next reversal.
Final Bear Flag
Video 16C: He’s talking about how opposite bars in a trend can be the start of a reversal. But don’t understand.
A lot of times when the market has a huge collapse and then a micro double-bottom, it will channel up.,
Every sell-off is going to reverse up, and it will reverse up from a line.
Patterns are rarely perfect, but be flexible. Why?
The computers see them.
A lot of overlapping bars and two-sided trading is a sign of…
A weak trend
Again, define Nested
Smaller Pattern within a bigger pattern.
When you have a Spike and Channel bear trend, it’s usually followed by a _____________
Trading Range.
At least half of the time the top of the range is at the start of the channel. So that would be the target for the start of the rally.
When you see a trend with bad follow through, it is probably going to transition into a ___________________ before long.
Trading Range.
Once it’s in a trading range you have to be thinking we can either get a trend continuation, or a trend reversal.
Most Spike and Channels have ____ pushes
3
When you have a Spike and Channel bear trend, it often will go sideways to halfway up, then decide whether it wants to reverse, or continue the trend.
Traders should look at bear channel as ______ flags, because most have a ___________
Bull Flag
Bull Breakout
(Similar: A Bull channel is a bear flag)
____% of Bull Channels, even if tight (strong), have a Bear Breakout (BO) (Below the bull trend line)
75%
When a bear channel is also a Wedge Bottom, can get a ___________ instead of just Trading Range (TR)
Bull Trend
Channel Breakouts fail ___% of the time within ___ bars
75% of the time
within 5 Bars
(But in the picture attached, if the failed breakout has momentum up, then there is a change it can succeed)
When something happens that should not be happening, there is going to be strong follow-through.
Once you start to see 3, 5, 10+ bars breaking over a bull channel, you have to assume that the market has changed.
Only __% of the time will you get a bear breakout below a bear channel
25%
Instead, look to be buying with limit orders at the bottom of the channel.
The biggest WITH trend bar after 20 or 50 bars is usually an ______________
Exhaustion Bar. Climax
Probably the market will reverse soon.
Define Overshoot
When price tests a line and goes just above it. Al says most tests of lines are overshoot (reverse after going beyond line).
Can also fall short of the line and that is called an undershoot.
Broad Channels that are mostly sideways, usually a TR are to be traded how?
Buy Low, Sell High, Scalp (BLSHS)
Micro Double-Top. There’s a higher probability selling on the second attempt
All trading rangers are neutral. They have both bullish and bearish properties. Eventually……
One side will win
Once a trading range goes on for 20 or more bars, the probability of a bull or a bear breakout are ______
Even
