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📈📚 Master the Art of Price Action Analysis! 📚📈
Discover the power of price action trading and take your trading game to the next level. No need for complex strategies or overwhelming indicators! 🚀💹
While complex strategies and systems may work for some traders, understanding price action is all you really need to succeed in this arena. Price action analysis is an effective approach to trading today's markets—whether you're involved in stocks, futures, or options. It allows you to focus on the process of trading without being overwhelmed by a complicated collection of trading techniques. And while this method may appear elementary, it can significantly enhance returns as well as minimize downside risk.
One way to apply price action analysis to your trading endeavors is with chart patterns. Nobody understands this better than author Al Brooks, a technical analyst for Futures magazine and an independent trader for more than twenty years. Brooks discovered ten years ago that reading price charts without indicators proved to be the most simple, reliable, and profitable way for him to trade. Mastering that discipline is what made him consistently successful in trading. Now, with Reading Price Charts Bar by Bar, Brooks shares his extensive experience on how to read price action.
At the end of the day, anyone can look at a chart, whether it is a candle chart for E-mini S&P 500 futures trading or a bar chart for stock trading, and see very clear entry and exit points. But doing this in real time is much more difficult. Reading Price Charts Bar by Bar will help you become proficient in the practice of reading price action—through the use of trendlines and trend channel lines, prior highs and lows, breakouts and failed breakouts, and other tools—and show you how this approach can improve the overall risk-reward ratio of your trades.
Written with the serious trader in mind, this reliable resource addresses the essential elements of this discipline, including the importance of understanding every bar on a price chart, why particular patterns are reliable setups for trades, and how to locate entry and exit points as markets are trading in real time. Brooks focuses on five-minute candle charts to illustrate basic principles, but discusses daily and weekly charts as well. Along the way, he also explores intraday swing trades on several stocks and details option purchases based on daily charts—revealing how using price action alone can be the basis for this type of trading.
There's no easy way to trade, but if you learn to read price charts, find reliable patterns, and get a feel for the market and time frame that suits your situation, you can make money. While price action trading doesn't require sophisticated software or an abundance of indicators, this straightforward approach can still put you in a better position to profit in almost any market. Reading Price Charts Bar by Bar will show you how.
TABLE OF CONTENTS
Preface xiii
CHAPTER 1 Price Action 1
Trend Bars and Doji Bars 7
Bar Basics: Signal Bars, Entry Bars, Setups, and Candle Patterns 11
Signal Bars: Reversal Bars 13
Signal Bars: Other Types 17
Outside Bars 36
The Importance of the Close of the Bar 42
Exchange Traded Funds (ETFs) and Inverse Charts 45
Second Entries 46
Late and Missed Entries 49
CHAPTER 2 Trendlines and Trend Channels 51
Trendlines 51
Micro Trendlines: Small, Steep Trendlines in Strong Trends 55
Horizontal Lines: Swing Points and Other Key Price Levels 61
Trend Channel Lines 63
Dueling Lines: Intersecting Trendline and Trend Channel Line 68
CHAPTER 3 Trends 71
Two Legs 75
Signs of Strength 76
Common Trend Patterns 81
Trend from the Open 82
Reversal Day 86
Trend Resumption Day 86
Trending Trading Range Days 88
Tight Channels and Spike and Channel Bull or Bear 91
Stairs: Broad Channel Trend 95
CHAPTER 4 Pullbacks 99
First Pullback Sequence: Bar, Minor Trendline, EMA, EMA Gap, Major Trendline 101
Double Top Bear Flags and Double Bottom Bull Flags 104
EMA and Gap EMA Pullbacks 108
2 HM: If Away from EMA for Two or More Hours, Then Fade EMA and First EMA Gap Bar 110
Trend Day 11:30 Stop Run Pullback to Trap You Out 112
Counting the Legs of a Trend 114
High/Low 1, 2, 3, and 4 118
Variations of High/Low 2 Setups 128
Three Push Pullbacks 132
CHAPTER 5 Trading Ranges 137
Tight Trading Ranges 138
Barb Wire 142
Middle of the Day, Middle of the Range 148
Big Up, Big Down 150
Trading Ranges Setting Up Trend Reversals 152
CHAPTER 6 Breakouts 155
Breakout Entries in Strong Trend 156
Breakout Pullbacks and Breakout Tests 158
CHAPTER 7 Magnets 165
Measured Moves Based on the First Pullback (AB = CD) 165
Measured Moves on Breakouts Based on Thin Areas and on Flags 167
Reversals Often End at Signal Bars from Prior Failed Reversals 171
Other Price Magnets 172
CHAPTER 8 Trend Reversals 175
Trendline Break 184
Trend Channel Line Failed Breakouts: Climaxes, Parabolas, and V Tops and Bottoms 187
Signs of Strength in the First Leg of a Reversal 188
Trends Reverse with a Test: Either an Undershoot or an Overshoot 190
Double Top and Bottom Pullbacks 202
Climax: Spike and Trading Range Reversals 207
Climax: Three Pushes and Wedges (Trend Channel Line Overshoots and Reversals) 210
Expanding Triangles 215
CHAPTER 9 Minor Reversals: Failures 221
Failed Signal and Entry Bars and One-Tick Failed Breakouts 222
Failed High/Low 2 226
Failed Higher High and Lower Low Breakouts 229
Failed Trendlines and Trend Channel Lines 234
Failed Reversals 239
Failed Final Flags: Tight Trading Range 243
Failed Final Flags: Huge Trend Bar 245
Failed Wedges 247
Failed Scalps: Five-Tick Failed Breakouts and Failure to Reach a Scalper’s Profit Target 251
CHAPTER 10 Day Trading 255
Selecting a Market 256
Time Frames and Chart Types 258
Globex, Pre-Market, Post-Market, and Overnight Market 267
Scalping, Swinging, Trading, and Investing 269
Always in the Market 273
Have at Least Two Reasons to Enter a Trade 275
Entering on Stops 277
Protective Stops and Getting Trapped In or Out of a Trade 281
CHAPTER 11 The First Hour 289
Patterns Related to the Premarket 291
Patterns Related to Yesterday 292
Trend Bar on Gap Open: First or Second Bar 302
Gap Openings: Reversals and Continuations 303
Trend from the Open or Trend from the First Bar 305
Third Bar of the Day and the 15-Minute Close 310
Strong Trend Bars in the First Hour Often Predict Strength Later in the Day in the Same Direction 311
Opening Patterns and Reversals 313
Double Bottom and Double Top Flags 317
Trading Range Breakouts 319
First Pullback 321
CHAPTER 12 Detailed Day Trading Examples 325
CHAPTER 13 Daily, Weekly, and Monthly Charts 331
Huge Volume Reversals 343
CHAPTER 14 Options 347
CHAPTER 15 Best Trades 353
Major Reversals 357
Minor Reversal Scalps during Trading Range Days 368
Pullbacks in a Strong Trend 369
Intraday Stocks 374
Trading Guidelines 381
Glossary 387
About the Author 395
Index 397
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