Advanced Gap Techniques

Transcription

1 CME July 20, 2018 Advanced Gap Techniques Al Brooks Price Action Fundamentals Brooks Trading Course BrooksTradingCourse.com BrooksPriceAction.com

2 Main Points Slide Gaps Micro, Exhaustion, Measuring, Breakout (BO) Test, Body 2 BrooksTradingCourse.com BrooksPriceAction.com Slide 1

3 Gap: Sign of Either Strong Bulls or Bears Any space between any 2 prices H, L, O, C of any bar Gap down between open and prior close Gap between low and prior high Exhaustion Gap, and it closed on next bar Moving Averages Trend lines Can be very minor Gap between close and highs of prior bars Gap between low and MA Breakout (BO) test of signal bar Gap above trend line Gap between low and prior high BrooksTradingCourse.com BrooksPriceAction.com Slide 2

4 Gaps Are Common: Every Trend Bar Every trend bar is an attempt to breakout (BO), and therefore is a gap Most BO attempts fail, and the Trading Range (TR) continues Most gaps have no predictive value, and no follow-through The chance of a trend is greater if the low of the bar after the BO bar is far above the high of the bar before BrooksTradingCourse.com BrooksPriceAction.com Slide 3

5 Micro Gap: Look at High and Low of Bar before and After For every trend bar Look at bar before and bar after If they do not overlap, there is a gap Odds of follow-through are greater BrooksTradingCourse.com BrooksPriceAction.com Slide 4

6 If Micro Gap Stays Open: Trend Is Stronger Pullback (PB) fell below bottom of gap Bulls no longer able to keep gaps open Bulls losing control Higher prices less likely Bodies overlap No longer bull trend Bear gaps staying open Lower prices likely BrooksTradingCourse.com BrooksPriceAction.com Slide 5

7 Gap Open Bar after Bull Bar: Opens above or below Close No Gap If bar opens above or below close of prior bar, it is a Gap Open Bar Gap up: Open of 2 nd bar is above close of 1 st bar Gap down: Open of 2 nd bar is below close of 1 st bar No gap Open of 2 nd bar is exactly at close of prior bar Bull BO Gap up after bull bar, then becomes bull bar Failed bull BO Gap up after bull bar, then becomes bear bar PB in bull trend Gap down after bull bar, then becomes bull bar Reversal down Gap down after bull bar, then becomes bear bar BrooksTradingCourse.com BrooksPriceAction.com Slide 6

8 Gap Open Bar after Bear Bar: Opens below or above Close No Gap If bar opens above or below close of prior bar, it is a Gap Open Bar Gap down: Open of 2 nd bar is below close of 1 st bar Gap up: Open of 2 nd bar is above close of 1 st bar No gap Open of 2 nd bar is exactly at close of prior bar Bear BO Gap down after bear bar, then becomes bear bar Failed Bear BO Gap down after bear bar, then becomes bull bar PB in bear trend Gap up after bear bar, then becomes bear bar Reversal up Gap up after bear bar, then becomes bull bar BrooksTradingCourse.com BrooksPriceAction.com Slide 7

9 Gap Open Bars: Buy The Close Bull Trend Gap up and bull bar after bull bar Bulls buying close of bull bar Higher prices likely Gap up and bear bar after bull bar Bulls panicking out, bears aggressive Pullback or reversal likely Gap down Bull is weakening Gap up after bear bar No Follow-through bull bar Expect TR or down Buy The Close Every open at or above prior close Eager bulls 7/25/17 BrooksTradingCourse.com BrooksPriceAction.com Slide 8

10 Gap Open Bars: Sell The Close Bear Trend Sell The Close Opens are at (or below) prior close Gap up after bear bar Many bulls buying close of bear bar Trend now weaker Gap up after bull bar Bears giving up, desperate to get out Bulls getting eager Gap down and bull bar after bear bar Pullback (PB) or reversal likely BrooksTradingCourse.com BrooksPriceAction.com Slide 9

11 Gap: Between BO Point and Pullback BO point (bottom of gap) Every trend bar is a BO and a gap When the bull resumes after a PB from a BO, without pulling back below the BO point (bears could not close the gap), bulls buy more, and bears wait to sell Some bears sold at the prior high and scaled in higher They bet the BO would fail The PB is a test of the BO The bulls bought again at an even higher price, Confident of a Measured Move (MM) up This means that there are usually many more bars left to the trend Pullback (PB) from BO (top of gap) BrooksTradingCourse.com BrooksPriceAction.com Slide 10

12 Gap: Often Profit Taking at Measured Move Bulls took profits at Measured Move target Bears sold for scalp BrooksTradingCourse.com BrooksPriceAction.com Slide 11

13 Gap after 20 Bars: Still Can Be Measuring Gap Another strong BO Bulls will again buy, hoping for Measuring Gap Bears want Exhaustion Gap, but need a sell signal BrooksTradingCourse.com BrooksPriceAction.com Slide 12

14 Measured Move: Often Several Choices for Bottom Several choices for bottom of Measured Move (start of current small rally) Different computers will use different starting point Bulls will consider all and take profits, if rally stalls near any of the 3 targets BrooksTradingCourse.com BrooksPriceAction.com Slide 13

15 Measured Move Target: Bulls and Bears Sell Bulls took profits at Measured Move target Bears sold for scalp BrooksTradingCourse.com BrooksPriceAction.com Slide 14

16 Body Gaps: Tails Overlap, but Not Bodies Body Gap since top of highest body in PB is below bottom of body of every bar in upper TR It is an actual gap on a line chart, which only plots closes Lower prices likely and possible MM down 6/5/18 Body of PB bar overlapped body of prior low No longer Body Gap so bear trend is likely ending BrooksTradingCourse.com BrooksPriceAction.com Slide 15

17 Body Gap: Bars Overlap, but Bodies Do Not Body Gap Bars overlapped, but bodies did not Therefore, gap on a line chart Not as reliable as when no overlap, but still usually leads to Measured Move BrooksTradingCourse.com BrooksPriceAction.com Slide 16

18 Review Slide Gaps Micro, Exhaustion, Measuring, Breakout (BO) Test, Body 2 BrooksTradingCourse.com BrooksPriceAction.com Slide 17

19 CME July 20, 2018 Advanced Gap Techniques BrooksTradingCourse.com Al Brooks Price Action Fundamentals Brooks Trading Course BrooksPriceAction.com