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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks
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Book Discussion: Reading Price Charts Bar by Bar by Al Brooks

  #191 (permalink)
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H2 Failures

cunparis

The only thing I have noticed ( in 3 days of trading this concept) - when price gets too far away from ema unless it's parabolic it will generally want to return to the mean ( hence H1 and H2's are generally ok).

The failures tend to be spectacular however - I think because you would have to be a very confident and experienced trader to instantly reverse your position - as most people are NOT this is what feeds the resultant trend, Brooks' dumb money ( that would be me then)

Here is another good example on the es yesterday.

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  #192 (permalink)
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Here is another good example on the es yesterday.

I think your H2 is really an H3. Which is why I'm really hesitating to take H2 reversals because I often see H3's meaning the H2 reversal failed. I'd need additional confirmation for me to take the reversal, like with a volume indicator..

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  #193 (permalink)
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Can someone confirm something here, please? Regardless of the 4-min short signal on the spreadsheet at cell K185, are my boxes for L1 and L2 correct in pointing these out in the lower left window? I'm still trying to exactly figure out how to spot these Hx and Lx bars.

Thanks in advance.

H

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  #194 (permalink)
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Can someone confirm something here, please? Regardless of the 4-min short signal on the spreadsheet at cell K185, are my boxes for L1 and L2 correct in pointing these out in the lower left window? I'm still trying to exactly figure out how to spot these Hx and Lx bars.

Thanks in advance.

H

Hapster,

Keep in the mind the context of the trade and what the L2/H2's are trying to tell you. For an L2 you are looking for a primary downtrend and the market making two attempts to push higher within that downtrend. When the second push fails an L2 is formed and gives you an entry. On this chart the ES was still in a primary uptrend so you should have been looking for a High1 High2 set up. The ES does make a High2 after two attempts to push down (it was a bit horizontal so not the cleanest pattern). However, immediately after making the High2 it fails and coincidentally makes a Low2. Typically when a pattern fails, such as the High2 in this situation, you can flip the position so it would make sense to go short.

I hope that makes sense. Just remember the context of the trade and always keep in mind what the High2/Low2 patterns actually represent.

Blz

P.S. What is all that stuff you got going on in your screenshot?

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  #195 (permalink)
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Thanks, Blz...

I'm intending on using the Brooks stuff as SECONDARY material for confirmation, not PRIMARY material, and the reason is exactly why I've got that other stuff going on, as you say. It's a spreadsheet I wrote that I make a TON of ES points on. Once that L1 registered yesterday, the spreadsheet was giving a SOLID short signal. I even posted it as such in the chat here. No way was I looking for a long at that point, but from then on, it was all about the entry.

Thanks again.

H

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  #196 (permalink)
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One more thing, Blz...

You're saying that because that L2 bar that you corrected in my chart failed to push above the bull bar that immediately preceded it, THAT'S what makes it an L2?

Thanks again.... as we all know, the Brooks book is kinda hard to understand sometimes.

H

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Thanks, Blz...

I'm intending on using the Brooks stuff as SECONDARY material for confirmation, not PRIMARY material, and the reason is exactly why I've got that other stuff going on, as you say. It's a spreadsheet I wrote that I make a TON of ES points on. Once that L1 registered yesterday, the spreadsheet was giving a SOLID short signal. I even posted it as such in the chat here. No way was I looking for a long at that point, but from then on, it was all about the entry.

Thanks again.

H

You quite welcome. It sounds like some of the price action stuff could be excellent in timing your entry for anything based off that spreadsheet. What's in that spreadsheet? Is it all mathematically based or am I inquiring too much into a proprietary product?

Glad to help.

Blz

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  #198 (permalink)
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Well, not really a proprietary product, per se, as there only exists ONE of these spreadsheets on the planet, to wit: mine, but yeah, all the colors and formatting are based on one basic calculation for each set of the last 5 bars. This calculation computes a number between 0 and 100, 0 being extreme weakness, and 100 being extreme strength, thus the different shades of red to green in between for each time frame. The white background in the "signal" cells indicate the entry signals and are pretty accurate.

Really appreciate the Brooks clarifications!!!

H

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One more thing, Blz...

You're saying that because that L2 bar that you corrected in my chart failed to push above the bull bar that immediately preceded it, THAT'S what makes it an L2?

Thanks again.... as we all know, the Brooks book is kinda hard to understand sometimes.

H

I almost hate to even call it an L2. It's really more appropriate to call it a failed High2 as the primary trend was up and you would be looking for a High2 pattern at the time. However, if you think about what a failed High2 pattern is, the market making two attempts to push up and failing, then its left to logic that it is the same as a Low2 forming on the High2 failure.

I like logic and I'm a math guy so here goes;

Failed High2 = Market makes two attempts to push higher and fails,
Low2 = Market makes two attempts to push higher and fails,
therefore Low2 = Failed High2

Blz

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Hapster View Post
Well, not really a proprietary product, per se, as there only exists ONE of these spreadsheets on the planet, to wit: mine, but yeah, all the colors and formatting are based on one basic calculation for each set of the last 5 bars. This calculation computes a number between 0 and 100, 0 being extreme weakness, and 100 being extreme strength, thus the different shades of red to green in between for each time frame. The white background in the "signal" cells indicate the entry signals and are pretty accurate.

Really appreciate the Brooks clarifications!!!

H

I'd be curious to hear more about this spreadsheet if you are willing to share, if not I completely understand. I am always intrigued by math based quant strategies for trading.

Blz

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