Reading Price Charts Bar by Bar

hey guys here's a summary of reading price charts bar by bar the technical analysis of price action for the series Trader written by Al Brooks chapter 1 price action the way I've set up the slot show is these are the sections within the chapters and each section will have its own summary with examples so table of context Trend bars and dogee bars bar Basics signal bars entry bars setups and candle patterns signal bars reversal bars signal bars other types outside bars the importance of the close of the bar exchange traded ETFs and inverse charts second entries and late and missed entries Tren bars and DOI bars there are two types of bars Trend bars and DOI bars a trend bar is one bar controlled by the Bulls or the Bears it has a large body with minimal Tails these bars are Trends on smaller time frames they start on the high or the low below and move to the extreme with a strong close a dogee is a range bar that is neutral it usually has a one tick body and a long tail on both sides this shows the market traded at both ends and Clos in the middle bar more tail than b should be considered dois here's an example of trend bars for an uptrend we can see how they open on the lows and close on the high open on the low close on the high very small overlap so the Market's expanding away from Price open on the clo excuse me open on the low Clos on its high and this is the same bull the bull trend on the one minute time frame open on the low close on its high bull flag open on the low close on its high these are all trending bars and we can see some dois within the pullback in the middle right here so it's a good way to see comparison these dois have a lot of Tails and these Trend bars are trending away from their open here's an example of a downtrend you can see the strong uh an open with a strong close open with a strong close a pullback and then the market trends lower same Concepts apply the open is high and the close is low the open is high and the close is low so the market is trending it's looking for a new price small pullback you see some dois in the middle here open on its high close on its low open on its high close on its low open on its high close on its low this is is a trending environment these are the doy bars you see how it's a big up and a big down excuse me you can see how it's a big up and a big down and in the middle we have indecision so we have a strong an open with a strong close but then Bulls bought the strong close and the market went a little bit lower it came up and then it went up again so the price stayed within the boundaries of these bars but I just wanted to highlight the middle dogee how the price opens at the high it came down and went up and it closed on its low unfortunately um the black box is hiding this candle's Wick this Wick would be around here you can kind of see the close and the open bar Basics signal bars entry bars setups and candle patterns signal and setup bars tell us when to enter in the markets they only become signal and setup bars if the order gets filled on the bar after this means a signal and setup bar are labeled in hindsight there are two types of entries with Trend and counter Trend entries with Trend entries go in the direction of the current Trend and cter Trend entries go against the main Trend new Traders should focus on with Trend trades only enter one and stop enter with stop orders one tick above or below the signal bar the order gets filled as the market makes a treend bar in the direction of the trade candle patterns are formed through price action have no mystical value new Traders believe they can learn one pattern and they will be become profitable so this last sentence is actually really important the candle pattern only makes sense if the context makes sense throughout the whole book throughout the whole first chapter Al is always following up with take the trade as long as the context makes sense context and then trade not trade and then does the context make sense so here's just some examples of how he recommends beginner should order is a bull flag and a be flag here we can see a strong pushup a two-legged pullback and then the there's a small bull flag within the major bull flag if Traders think the price will go higher they should place a buy stop order above the signal bar and it will get filled on the next bar over once the order gets filled this becomes an entry bar and this gets the sign this becomes the setup or signal bar if the price happen to turn around and not take your order then it doesn't become a setup or signal bar just cancel your order and wait for another trade same thing with the bare flag we can see a bare flag a strong breakout and a small pullback the market pulls back on this bulld doy and then it goes for a new low when the Market's going for New Low Traders should place a stop order one one tick below this doe and it'll get filled on this bar over this is the signal bar and this is the entry bar I placed for me I would place the stop below this bar that's why you see it over this Wick because this is also a strong bar so you it would still get filled here or on this doy signal bars reversal bars reversal bars can be with trend or counter Trend entries all reversal bars should have should have a strong close with a minimal tail on top or bottom this shows the market tries to move in One Direction then has strong close in the opposite direction they shouldn't be taken without analyzing the prior price action reversal bars and all trades only work if the context makes sense begin will look for reversals in strong Trends instead wait for a reversal bar in the in the trend Direction counter Trend training should be avoided as a beginner I wanted to talk about this sentence instead wait for reversal bar bars in the trend direction that took me a while to understand so I want to show you guys because it's really important so this is a blow and bear reversal we can see a bull flag forming here's a double bottom these two bars where my mouse is hovering over is actually a bare channel so if we think this the bare Channel starts here and ends here this actually becomes a reversal bar they tried to go down and they forced their way up with a strong close Bulls were buying up until the last tick there's no Wick up top so this is a strong bull reversal bar in a bull Trend same thing goes for the bear reversal here we see a bare flag and a pullback the Bulls tried to race up to make a break the market structure but the Bears rejected it became a failed breakout reversal bar with a really strong close and a one tick at the end if you guys can see that where my mouse is over so this is a strong bear reversal with Trend it's a bare reversal in a bare bar in a bare flag these are counter trend reversal bars these are what Traders should be avoiding until you understand how to rec context better it's always better to trade with the trend here's a bad bear reversal bar we have a strong push up and then a reversal bar the Bulls try and make a new high but Bears slam them down and with a strong close and no Wick this looks like the previous bar in the bare flag here's a bad bull reversal bar the Bears try and go down on this Wick however the Bulls buy up the wick buy up the tail and they push with a strong close and no Wick at the top of this bar so these are both the same bars I just showed in the previous slide but with really bad context and I'll show you there's a comparison so this is the bull the first bull reversal the good one this is the Bad Bull reversal we can see how these two bars look almost exactly the same Wick at the bottom strong close Wick at the bottom strong close this is a withd trend reversal so it's a good buy this is a bad withd Trend this is a bad reversal it's a counter Trend reversal you can see Bulls got filled with this Wick but then they were immediately in the red they had no time to get out honestly if you didn't scalp out one point you'd just be in the red for two huge bear bars it's not good same thing goes for the bear reversal here's this strong bear reversal Bulls get trapped and then failed breakout to this becomes a continuation pattern it's a reversal but it's a continuation in a Bear Flag same exact thing with the Bear bar in the bull in the bull flag here's that Bear bar they look very similar in fact this had a stronger close there's no tick on this one but it's in it's within a bull flag so it ends up being a trap they didn't even break below the dogee this is the that dogee shows a range and this is a trap this is a bad bear reversal it's a counter Trend reversal this is a good bare reversal going with the flag signal bars and other types every bar in theory can be a signal bar if the trader takes it not every signal bar will lead to a Prof profitable trade only take the best signal bars that match the context the context of the signal bar always comes before the way the signal bar looks think back to the previous two slides the counter Trend reversals looked great they looked like the exact same thing you would take it with a withd trend trade however they were really bad context and you would lose money these are the other types of swingle bars we have an outside bar a bar that goes below and above the P bars range a bullish two bar reversal the first bar is a bear bar the second bar is a bull bar two 5minute bars will create a reversal on 10-minute time frame Bears two bar reversal the first bar is a bull bar the second bar is a bear bar two 5minute bars will create a reversal on the 10-minute time frame a shav bar a shave bar is when there are no Wicks on the top and bottom of the bar this shows urgency in the direction of the trend pools want no Wicks up top Bears went no Wicks on the bottom strong closes exhaustion this part bar happens at the end of a trend and can race to the support or resistance level usually bigger than all bars lay in the trend signal bar is outside bar an outside bar is a bar that goes below and above the previous bars range this is a bullish outside bar this if we see look at this bar in the middle the Bulls the Bears came down below and the Bulls went up top so the Bears get filled at the lows and Bulls get filled at the highs and that creates a range bound environment outside bars can be range bound so this is it went below the prior bar and above the prior bar here's a bearish outside bar it goes above the prior bar and below the prior bar Bulls get filled Bears get filled and this becomes one big range Bears can sell the highs Bulls can buy the lows here a signal bar signal bars bullish two bar reversal bullish two bar reversal the first bar is a bear bar and the second bar is a bull bar two five minute bars will create a reversal bar on the 10minute time time frame here's the first Bear bar they try and go down and then Bulls buy up the Bear bar and reverse right back to the highs and on the the 10-minute time frame this looks like a reversal pattern with the right context this could be a good trade the bad context you could be buying the highs and Shoring lows signal bars bearish two bar reversal a bearish two bar reversal the first bar is a bull bar the second bar is a bare bar two 5minute bars will create a reversal bar on the 10-minute time frame here we can see the bull bar and the Bears reverse it and create new lower prices strong close with a small small wick on 10-minute time frame this looks like a reversal bar if we saw this at resistance it could be a good short depending on what happens to the left see how the market race this tick this this tail you guys see is this bull bar and then this close you guys see is the leftover of the Bear bar so Bears won the five minute the 10minute battle here they're in control of the markets Within These two three candles signal bar shave bar shave bar is when there are no Wicks at the top bottom of the bar this shows us urgency in the direction of the trend Bulls want no Wicks up top bears want no Wicks on the bottom with strong closes so look at this first candle there's a wick so this this this tail shows a failed breakout and then a rush by the Bulls no no ticks up top and it shows urgency the market is willing to buy up until the last second of the candle close these are all done in the 5 Minute by the way same thing for the bear we see selling pressure pick up and then there's Wicks on tails on all three of these candles and then look at this candle that I'm pointing at with the arrow no tick at the bottom so bears are willing to sell up until the last second they're selling and then they price we see lower prices signal bars exhaustion exhaustion this bar happens at the end of a trend and can race to support or resistance usually bigger than all bars late in Trend so here we see we see a pretty decent bar with a start of the breakout and then we see some pullbacks and some overlap and have nowhere this bar race to resistance this bar is clearly bigger than all the bars to the left and it happened faster since the market moves so fast they can see this as a gift and people will take profits this usually will stop at an important resistance level which is why you see bear shorting Bulls are taking profits they're selling out the positions and then bears are also selling so this creates two types of people selling in one spot same thing for this bare flag we can see a good bear bear bar starting the trend then we Trend lower couple pullbacks and then a nice bar at the end of a trend these bars look identical but it's still bigger than all the previous 10 bars this bar also races down to support you can see here Bulls are taking profits and buy excuse me bears are taking profits and Bulls are buying lows these are signs of an exhaustion bar and the trader should think about closing his position and waiting for a new setup outside bars an outside bar is a big range on a smaller time frame these bars can be confused for breakout bars causing traders to buy the highs and short the lows the stop is usually far away from the entry for these reasons outside bars can be traps outside bars can be great signal bars if the context makes sense for the context to make sense the bar should be coming from a reversal after a trend line break Al gave outside bars its own section Within Chapter 1 because of how easily you can get trapped it's really easy to lose money on a bad outside bar and they look like breakout bars so this is an these are examples of good outside bars we see a strong bare Trend with a channel line break and a retest this candle is retesting the lows and it fails Bears try and short the lows and Bulls reverse the bar back into its high and there's no tick so they're willing to buy up the last Clos after a channel after a bare channel so this is showing the market could be transition positioning within the range or a small pullback this is a good bullish outside bar taking out all the prior bars highs and lows with a very strong close this is a bearish outside bar see here we can see the bullish trying to push higher and bears get the trend line break and they come up for a retest the bearish outside bar goes couple ticks above this dogee so the Bulls are getting trapped and then the Bears Force the bar down to its uh to a new to its low there's a small tick on this but that's okay because we can see the context is good we know Bulls got trapped the Bulls bought above this candle and got trapped on this doy and they tried and buy more and got trapped again and the Bears slammed the price down so Bulls who bought this candle are underwater and we can see it led to lower prices so this is a good outside bar this is outside bars with bad context there's no channel line break it's just the markets are going sideways and since the markets are going sideways Bulls bought this candle so they're buying the lows and bears are selling the highs if you're a bull who thought this was a good breakout of the previous candle and you bought the high you would be trapped if you're a bear who shorted the lows you you get short here you get trapped going up these are bad context bullish outside bars this is a bearish outside bar with the same exact idea the market is sideways the price is not expanding remember we know what trend Trend trending candles look like this looks like a lot of overlap it's not good Bulls get filled by one tick and bears get filled by one tick here trapping Traders on this bar and this bar if the bear was to go short here he would put his stop up here and immediately the market would reverse if the bull was to go along here he would put his stop down here get filled and the market would immediately reverse for these reasons bad outside bars can be trapped and it's really important to make sure you have a trend channel line break the importance of the close of the bar it's important to wait for the bar to close before entering because the close can tell us a lot of information Traders like to front run a breakout in the final seconds of the close to gain a few extra ticks then the bar suddenly collapses and it becomes a failed breakout setup the speed of this happening is often too fast for the Trader to flip to the right direction this does two things the trader wanted to make a few extra ticks now she is in a losing position and the trader misses a good entry for a winning position the ex TI the trader was trying to make was not worth it I don't have any um slides for this one because it was a small chapter small section of Al Brooks explaining this if you please wait for the candle to close because the five minute candles can collapse at the last second and you'd be buying the highs or shorting the lows of a failed breakout exchange traded funds and inverse charts sometimes looking at an ETF could help clear up price action spy is almost identical to the e- mini if you're having problems reading the chart in front of you sometimes an inverse chart can help paint the paint a better picture we all know what Spy is it's an ETF sometimes the price action is clearer on one ticker than is the other ticker there's I think SPX is also the same so stick to the one you trade stick to the one your broker let you execute on if you're having problems reading inverse or charts sometimes you can inverse it I I tend to be more bullish so if I was having problems reading a bearish day I could decide to inverse the chart and help the bullish help me see things from a bullish perspective and these are just an this is an inverse bullish chart these arrows are pointing to the pivot so you can see it's the same chart one looks like a bull Trend one looks like a bare Trend but there the same exact price action flipped second entries second entries are better entries because it shows the market has failed to go in One Direction twice if a second entry comes at a better price this could be a trap second entry should should have a worse fill because we are waiting for information this is really cool and it's helped me save a lot of money and find better trades this is a bull flag a good second entry and a bad second entry here we see the first pullback creating a high one this is the first entry and this another and then another pull back in a high too this creates the second entry what's what this is doing is showing that the Bears failed to break out once came up and failed to break out twice this is causing a trap and a break of the bare Channel this is a good buy this is a bad buy this is still a bull flag but you can see the high one is up here and then a deep pullback and a high two you might think oh this is a range play and I should buy the high of this because this is a great bar it's a shave top no Wick set top this is what we just talked about in previous slides however the difference between these two is there's no Trend Channel L break we're still in this broad bare Channel after a bull Trend this is more of a range play you see how buying this high if you hit in you would get trapped into a losing position if you hit in here after a new high is made a higher low this would be a winning position this is a good one this is a trap the Bears get trapped failing to break out here the break out for the Bears is still going and this is actually just a pullback in a bare Trend leg one leg two for the Bears second entries the bearish good second entry we can see is a double top bare flag this one's a little bit hard to see but if if we entered on this bar we would get an all right an all right price and we'd have to wait for more we have to wait for the pullback the second entry comes at a worse price with more information two bar reversal small Wicks led to another move down if we enter here it's a worse fill so the entry is worse this is a better entry but we're paying for the information bad second entry strong bullbar you try and go short here Bulls make another leg up you try and go again look you you can short at a better price cuz this bar is higher than that bar so this might actually be a bull Trend you can see a double bottom in a flag this ended up being a bull flag so what it means to if the second entry is a better price this second entry is higher than this so you can make a few extra points so that's a better price this second entry is worse it's lower than this so it's a worse price and we have more information now we know the double top we two bar reversal same thing here this is a worst priced so if you enter here you're going to lose points because this is a lower priced uh bar entry this is a this is a good entry theoretically because you're saving you could buy lower but since you're buying lower later you're actually buying into a bare leg you have more information why would you get more information and a better price late and missed entries when we are trading a trend it it is easy to miss an entry if a Trader needs to take a miss or late entry he should enter at the market with partial position size or the correct stop while using the cck stop Al uses a rule of thumb to enter in 20% of your position size one e mini contract is 10 micros two micros contracts is 20% of One e- Mini contract so what this means is if you wanted to enter late in the trend and you're seeing know the Market's racing away get in the trend with 20% of your position and put the stop where it's supposed to to be Trail it how you would with 20% scale in scale out if you were to enter one e mini while the market has ran your stop maybe 10 15 points that could be $5 $600 loss just in one contract it's not worth it for a few points so Al recommends to enter two micros because that's 20% of One e- Mini contract one e mini contract is 10 micros this is the end of chapter 1 please leave any questions in the comments and I'll try my best to answer them thank you for your time and if you learned anything please consider hitting the Subscribe button have a good day everyone

hey guys here&#39;s a summary of reading price charts bar by bar the technical analysis of price action for the series Trader written by Al Brooks chapter 1 price action the way I&#39;ve set up the slot show is these are the sections within the chapters and each section will have its own summary with examples so table of context Trend bars and dogee bars bar Basics signal bars entry bars setups and candle patterns signal bars reversal bars signal bars other types outside bars the importance of the close of the bar exchange traded ETFs and inverse charts second entries and late and missed entries Tren bars and DOI bars there are two types of bars Trend bars and DOI bars a trend bar is one bar controlled by the Bulls or the Bears it has a large body with minimal Tails these bars are Trends on smaller time frames they start on the high or the low below and move to the extreme with a strong close a dogee is a range bar that is neutral it usually has a one tick body and a long tail on both sides this shows the market traded at both ends and Clos in the middle bar more tail than b should be considered dois here&#39;s an example of trend bars for an uptrend we can see how they open on the lows and close on the high open on the low close on the high very small overlap so the Market&#39;s expanding away from Price open on the clo excuse me open on the low Clos on its high and this is the same bull the bull trend on the one minute time frame open on the low close on its high bull flag open on the low close on its high these are all trending bars and we can see some dois within the pullback in the middle right here so it&#39;s a good way to see comparison these dois have a lot of Tails and these Trend bars are trending away from their open here&#39;s an example of a downtrend you can see the strong uh an open with a strong close open with a strong close a pullback and then the market trends lower same Concepts apply the open is high and the close is low the open is high and the close is low so the market is trending it&#39;s looking for a new price small pullback you see some dois in the middle here open on its high close on its low open on its high close on its low open on its high close on its low this is is a trending environment these are the doy bars you see how it&#39;s a big up and a big down excuse me you can see how it&#39;s a big up and a big down and in the middle we have indecision so we have a strong an open with a strong close but then Bulls bought the strong close and the market went a little bit lower it came up and then it went up again so the price stayed within the boundaries of these bars but I just wanted to highlight the middle dogee how the price opens at the high it came down and went up and it closed on its low unfortunately um the black box is hiding this candle&#39;s Wick this Wick would be around here you can kind of see the close and the open bar Basics signal bars entry bars setups and candle patterns signal and setup bars tell us when to enter in the markets they only become signal and setup bars if the order gets filled on the bar after this means a signal and setup bar are labeled in hindsight there are two types of entries with Trend and counter Trend entries with Trend entries go in the direction of the current Trend and cter Trend entries go against the main Trend new Traders should focus on with Trend trades only enter one and stop enter with stop orders one tick above or below the signal bar the order gets filled as the market makes a treend bar in the direction of the trade candle patterns are formed through price action have no mystical value new Traders believe they can learn one pattern and they will be become profitable so this last sentence is actually really important the candle pattern only makes sense if the context makes sense throughout the whole book throughout the whole first chapter Al is always following up with take the trade as long as the context makes sense context and then trade not trade and then does the context make sense so here&#39;s just some examples of how he recommends beginner should order is a bull flag and a be flag here we can see a strong pushup a two-legged pullback and then the there&#39;s a small bull flag within the major bull flag if Traders think the price will go higher they should place a buy stop order above the signal bar and it will get filled on the next bar over once the order gets filled this becomes an entry bar and this gets the sign this becomes the setup or signal bar if the price happen to turn around and not take your order then it doesn&#39;t become a setup or signal bar just cancel your order and wait for another trade same thing with the bare flag we can see a bare flag a strong breakout and a small pullback the market pulls back on this bulld doy and then it goes for a new low when the Market&#39;s going for New Low Traders should place a stop order one one tick below this doe and it&#39;ll get filled on this bar over this is the signal bar and this is the entry bar I placed for me I would place the stop below this bar that&#39;s why you see it over this Wick because this is also a strong bar so you it would still get filled here or on this doy signal bars reversal bars reversal bars can be with trend or counter Trend entries all reversal bars should have should have a strong close with a minimal tail on top or bottom this shows the market tries to move in One Direction then has strong close in the opposite direction they shouldn&#39;t be taken without analyzing the prior price action reversal bars and all trades only work if the context makes sense begin will look for reversals in strong Trends instead wait for a reversal bar in the in the trend Direction counter Trend training should be avoided as a beginner I wanted to talk about this sentence instead wait for reversal bar bars in the trend direction that took me a while to understand so I want to show you guys because it&#39;s really important so this is a blow and bear reversal we can see a bull flag forming here&#39;s a double bottom these two bars where my mouse is hovering over is actually a bare channel so if we think this the bare Channel starts here and ends here this actually becomes a reversal bar they tried to go down and they forced their way up with a strong close Bulls were buying up until the last tick there&#39;s no Wick up top so this is a strong bull reversal bar in a bull Trend same thing goes for the bear reversal here we see a bare flag and a pullback the Bulls tried to race up to make a break the market structure but the Bears rejected it became a failed breakout reversal bar with a really strong close and a one tick at the end if you guys can see that where my mouse is over so this is a strong bear reversal with Trend it&#39;s a bare reversal in a bare bar in a bare flag these are counter trend reversal bars these are what Traders should be avoiding until you understand how to rec context better it&#39;s always better to trade with the trend here&#39;s a bad bear reversal bar we have a strong push up and then a reversal bar the Bulls try and make a new high but Bears slam them down and with a strong close and no Wick this looks like the previous bar in the bare flag here&#39;s a bad bull reversal bar the Bears try and go down on this Wick however the Bulls buy up the wick buy up the tail and they push with a strong close and no Wick at the top of this bar so these are both the same bars I just showed in the previous slide but with really bad context and I&#39;ll show you there&#39;s a comparison so this is the bull the first bull reversal the good one this is the Bad Bull reversal we can see how these two bars look almost exactly the same Wick at the bottom strong close Wick at the bottom strong close this is a withd trend reversal so it&#39;s a good buy this is a bad withd Trend this is a bad reversal it&#39;s a counter Trend reversal you can see Bulls got filled with this Wick but then they were immediately in the red they had no time to get out honestly if you didn&#39;t scalp out one point you&#39;d just be in the red for two huge bear bars it&#39;s not good same thing goes for the bear reversal here&#39;s this strong bear reversal Bulls get trapped and then failed breakout to this becomes a continuation pattern it&#39;s a reversal but it&#39;s a continuation in a Bear Flag same exact thing with the Bear bar in the bull in the bull flag here&#39;s that Bear bar they look very similar in fact this had a stronger close there&#39;s no tick on this one but it&#39;s in it&#39;s within a bull flag so it ends up being a trap they didn&#39;t even break below the dogee this is the that dogee shows a range and this is a trap this is a bad bear reversal it&#39;s a counter Trend reversal this is a good bare reversal going with the flag signal bars and other types every bar in theory can be a signal bar if the trader takes it not every signal bar will lead to a Prof profitable trade only take the best signal bars that match the context the context of the signal bar always comes before the way the signal bar looks think back to the previous two slides the counter Trend reversals looked great they looked like the exact same thing you would take it with a withd trend trade however they were really bad context and you would lose money these are the other types of swingle bars we have an outside bar a bar that goes below and above the P bars range a bullish two bar reversal the first bar is a bear bar the second bar is a bull bar two 5minute bars will create a reversal on 10-minute time frame Bears two bar reversal the first bar is a bull bar the second bar is a bear bar two 5minute bars will create a reversal on the 10-minute time frame a shav bar a shave bar is when there are no Wicks on the top and bottom of the bar this shows urgency in the direction of the trend pools want no Wicks up top Bears went no Wicks on the bottom strong closes exhaustion this part bar happens at the end of a trend and can race to the support or resistance level usually bigger than all bars lay in the trend signal bar is outside bar an outside bar is a bar that goes below and above the previous bars range this is a bullish outside bar this if we see look at this bar in the middle the Bulls the Bears came down below and the Bulls went up top so the Bears get filled at the lows and Bulls get filled at the highs and that creates a range bound environment outside bars can be range bound so this is it went below the prior bar and above the prior bar here&#39;s a bearish outside bar it goes above the prior bar and below the prior bar Bulls get filled Bears get filled and this becomes one big range Bears can sell the highs Bulls can buy the lows here a signal bar signal bars bullish two bar reversal bullish two bar reversal the first bar is a bear bar and the second bar is a bull bar two five minute bars will create a reversal bar on the 10minute time time frame here&#39;s the first Bear bar they try and go down and then Bulls buy up the Bear bar and reverse right back to the highs and on the the 10-minute time frame this looks like a reversal pattern with the right context this could be a good trade the bad context you could be buying the highs and Shoring lows signal bars bearish two bar reversal a bearish two bar reversal the first bar is a bull bar the second bar is a bare bar two 5minute bars will create a reversal bar on the 10-minute time frame here we can see the bull bar and the Bears reverse it and create new lower prices strong close with a small small wick on 10-minute time frame this looks like a reversal bar if we saw this at resistance it could be a good short depending on what happens to the left see how the market race this tick this this tail you guys see is this bull bar and then this close you guys see is the leftover of the Bear bar so Bears won the five minute the 10minute battle here they&#39;re in control of the markets Within These two three candles signal bar shave bar shave bar is when there are no Wicks at the top bottom of the bar this shows us urgency in the direction of the trend Bulls want no Wicks up top bears want no Wicks on the bottom with strong closes so look at this first candle there&#39;s a wick so this this this tail shows a failed breakout and then a rush by the Bulls no no ticks up top and it shows urgency the market is willing to buy up until the last second of the candle close these are all done in the 5 Minute by the way same thing for the bear we see selling pressure pick up and then there&#39;s Wicks on tails on all three of these candles and then look at this candle that I&#39;m pointing at with the arrow no tick at the bottom so bears are willing to sell up until the last second they&#39;re selling and then they price we see lower prices signal bars exhaustion exhaustion this bar happens at the end of a trend and can race to support or resistance usually bigger than all bars late in Trend so here we see we see a pretty decent bar with a start of the breakout and then we see some pullbacks and some overlap and have nowhere this bar race to resistance this bar is clearly bigger than all the bars to the left and it happened faster since the market moves so fast they can see this as a gift and people will take profits this usually will stop at an important resistance level which is why you see bear shorting Bulls are taking profits they&#39;re selling out the positions and then bears are also selling so this creates two types of people selling in one spot same thing for this bare flag we can see a good bear bear bar starting the trend then we Trend lower couple pullbacks and then a nice bar at the end of a trend these bars look identical but it&#39;s still bigger than all the previous 10 bars this bar also races down to support you can see here Bulls are taking profits and buy excuse me bears are taking profits and Bulls are buying lows these are signs of an exhaustion bar and the trader should think about closing his position and waiting for a new setup outside bars an outside bar is a big range on a smaller time frame these bars can be confused for breakout bars causing traders to buy the highs and short the lows the stop is usually far away from the entry for these reasons outside bars can be traps outside bars can be great signal bars if the context makes sense for the context to make sense the bar should be coming from a reversal after a trend line break Al gave outside bars its own section Within Chapter 1 because of how easily you can get trapped it&#39;s really easy to lose money on a bad outside bar and they look like breakout bars so this is an these are examples of good outside bars we see a strong bare Trend with a channel line break and a retest this candle is retesting the lows and it fails Bears try and short the lows and Bulls reverse the bar back into its high and there&#39;s no tick so they&#39;re willing to buy up the last Clos after a channel after a bare channel so this is showing the market could be transition positioning within the range or a small pullback this is a good bullish outside bar taking out all the prior bars highs and lows with a very strong close this is a bearish outside bar see here we can see the bullish trying to push higher and bears get the trend line break and they come up for a retest the bearish outside bar goes couple ticks above this dogee so the Bulls are getting trapped and then the Bears Force the bar down to its uh to a new to its low there&#39;s a small tick on this but that&#39;s okay because we can see the context is good we know Bulls got trapped the Bulls bought above this candle and got trapped on this doy and they tried and buy more and got trapped again and the Bears slammed the price down so Bulls who bought this candle are underwater and we can see it led to lower prices so this is a good outside bar this is outside bars with bad context there&#39;s no channel line break it&#39;s just the markets are going sideways and since the markets are going sideways Bulls bought this candle so they&#39;re buying the lows and bears are selling the highs if you&#39;re a bull who thought this was a good breakout of the previous candle and you bought the high you would be trapped if you&#39;re a bear who shorted the lows you you get short here you get trapped going up these are bad context bullish outside bars this is a bearish outside bar with the same exact idea the market is sideways the price is not expanding remember we know what trend Trend trending candles look like this looks like a lot of overlap it&#39;s not good Bulls get filled by one tick and bears get filled by one tick here trapping Traders on this bar and this bar if the bear was to go short here he would put his stop up here and immediately the market would reverse if the bull was to go along here he would put his stop down here get filled and the market would immediately reverse for these reasons bad outside bars can be trapped and it&#39;s really important to make sure you have a trend channel line break the importance of the close of the bar it&#39;s important to wait for the bar to close before entering because the close can tell us a lot of information Traders like to front run a breakout in the final seconds of the close to gain a few extra ticks then the bar suddenly collapses and it becomes a failed breakout setup the speed of this happening is often too fast for the Trader to flip to the right direction this does two things the trader wanted to make a few extra ticks now she is in a losing position and the trader misses a good entry for a winning position the ex TI the trader was trying to make was not worth it I don&#39;t have any um slides for this one because it was a small chapter small section of Al Brooks explaining this if you please wait for the candle to close because the five minute candles can collapse at the last second and you&#39;d be buying the highs or shorting the lows of a failed breakout exchange traded funds and inverse charts sometimes looking at an ETF could help clear up price action spy is almost identical to the e- mini if you&#39;re having problems reading the chart in front of you sometimes an inverse chart can help paint the paint a better picture we all know what Spy is it&#39;s an ETF sometimes the price action is clearer on one ticker than is the other ticker there&#39;s I think SPX is also the same so stick to the one you trade stick to the one your broker let you execute on if you&#39;re having problems reading inverse or charts sometimes you can inverse it I I tend to be more bullish so if I was having problems reading a bearish day I could decide to inverse the chart and help the bullish help me see things from a bullish perspective and these are just an this is an inverse bullish chart these arrows are pointing to the pivot so you can see it&#39;s the same chart one looks like a bull Trend one looks like a bare Trend but there the same exact price action flipped second entries second entries are better entries because it shows the market has failed to go in One Direction twice if a second entry comes at a better price this could be a trap second entry should should have a worse fill because we are waiting for information this is really cool and it&#39;s helped me save a lot of money and find better trades this is a bull flag a good second entry and a bad second entry here we see the first pullback creating a high one this is the first entry and this another and then another pull back in a high too this creates the second entry what&#39;s what this is doing is showing that the Bears failed to break out once came up and failed to break out twice this is causing a trap and a break of the bare Channel this is a good buy this is a bad buy this is still a bull flag but you can see the high one is up here and then a deep pullback and a high two you might think oh this is a range play and I should buy the high of this because this is a great bar it&#39;s a shave top no Wick set top this is what we just talked about in previous slides however the difference between these two is there&#39;s no Trend Channel L break we&#39;re still in this broad bare Channel after a bull Trend this is more of a range play you see how buying this high if you hit in you would get trapped into a losing position if you hit in here after a new high is made a higher low this would be a winning position this is a good one this is a trap the Bears get trapped failing to break out here the break out for the Bears is still going and this is actually just a pullback in a bare Trend leg one leg two for the Bears second entries the bearish good second entry we can see is a double top bare flag this one&#39;s a little bit hard to see but if if we entered on this bar we would get an all right an all right price and we&#39;d have to wait for more we have to wait for the pullback the second entry comes at a worse price with more information two bar reversal small Wicks led to another move down if we enter here it&#39;s a worse fill so the entry is worse this is a better entry but we&#39;re paying for the information bad second entry strong bullbar you try and go short here Bulls make another leg up you try and go again look you you can short at a better price cuz this bar is higher than that bar so this might actually be a bull Trend you can see a double bottom in a flag this ended up being a bull flag so what it means to if the second entry is a better price this second entry is higher than this so you can make a few extra points so that&#39;s a better price this second entry is worse it&#39;s lower than this so it&#39;s a worse price and we have more information now we know the double top we two bar reversal same thing here this is a worst priced so if you enter here you&#39;re going to lose points because this is a lower priced uh bar entry this is a this is a good entry theoretically because you&#39;re saving you could buy lower but since you&#39;re buying lower later you&#39;re actually buying into a bare leg you have more information why would you get more information and a better price late and missed entries when we are trading a trend it it is easy to miss an entry if a Trader needs to take a miss or late entry he should enter at the market with partial position size or the correct stop while using the cck stop Al uses a rule of thumb to enter in 20% of your position size one e mini contract is 10 micros two micros contracts is 20% of One e- Mini contract so what this means is if you wanted to enter late in the trend and you&#39;re seeing know the Market&#39;s racing away get in the trend with 20% of your position and put the stop where it&#39;s supposed to to be Trail it how you would with 20% scale in scale out if you were to enter one e mini while the market has ran your stop maybe 10 15 points that could be $5 $600 loss just in one contract it&#39;s not worth it for a few points so Al recommends to enter two micros because that&#39;s 20% of One e- Mini contract one e mini contract is 10 micros this is the end of chapter 1 please leave any questions in the comments and I&#39;ll try my best to answer them thank you for your time and if you learned anything please consider hitting the Subscribe button have a good day everyone

Transcript for:Reading Price Charts Bar by Bar

Transcript for:
Reading Price Charts Bar by Bar