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I have been reading Al Brook's new book and have come upon a term he uses frequently yet I still don't have a clear picture in my head.
Final Flag:
the best definition I have found which was on the Al Brooks PA website is: "A horizontal patter after a trend." This is a trading range and if so, what might the difference between a "Final Flag" and a trading range be??
Can you help answer these questions from other members on NexusFi?
try google some more..but final flag i didn t find either , might be the last flag in a row when a market makes a move and makes pushes for instance, usually 3-4 ...just guessing
"A protracted trend often forms a horizontal flag that extends sideways for several bars, breaks a trendline, and then breaks out to a new extreme but quickly reverses in the next few bars. This Failed Final Flag breakout often marks the end of the trend and sometimes leads to a reversal. In most cases, there will be a tradable, extended Countertrend move that will have at least two legs. A key point is that the flag is usually mostly horizontal and often can be as simple as an ii pattern."
"Failed Final Flags: after the breakout from the flag, the market comes back to the flag and usually breaks out of the other side."
2. Principle sketch in my understanding:
3. Examples for Brooks' first book as I understood it:
4. Just to be clear: I will not enter into any discussion on the technical aspects or relevancy of Brooks' theory. Not because I do not want. Just because I do not feel enough competent to do it. My purpose was just to help you with the vocabulary, because I remember that I suffered a lot with his semantics when I studied Brooks myself.
As far as I understand, a "failed failed breakout" refers to the following situation.
There is a breakout...
... but no follow-through, so the price comes back, at least a little, into the range: it is a failed breakrout...
... but, eventually, prices breaks out.
With respect to High 1, High 2, Low 1, Low 2, I feel that they are defined more clearly in the article "Five minutes to fame in the E-mini" available here: Five minutes to fame in the E-mini
Typical situation where High 1 and High 2 occur is within a down pullback within an uptrend.
The question is: when will the up move start again? Possible answer for Al Brooks (depending on the context) : on H2 bar.
H1 is the first bar within the down pullback, the high of which is above the previous bar.
After H1, there is a small leg up (each bar has a high higher than the previous bar).
Then a leg down (each bar has a high lower than the previous bar).
Then H2 is the next bar with a high higher than the previous bar. And possibly the place where the up move starts again.
Nicolas' explanation was great in clearing the matter. However I have some very elementary doubts. The bar at which FFF is depicted appear to be at different stages of the flag in the different figures. Is it the staff, or the end of the flag itself. If the former, does the flag follow.