trading opening breakouts and reversals...bo on open: 50% reverse, no matter how strong strong rally...

BrooksTradingCourse.com BrooksPriceAction.com

Al Brooks

How to Trade Price ActionBrooks Trading Course

Trading Opening Breakouts and

Reversals

Futures.io October 17, 2017


▪ 50% chance 1st BO will reverse

▪ H or L of day forms early

▪ Early BO: Breakout Mode or 18 Bar BO

▪ Failed BO of yesterday’s H or L

▪ Trend resumption after failed reversal

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Slide

Slide 1

Main Points


BO on Open: 50% Reverse, No Matter How Strong

Strong rally on openBecame H of day

Strong selloff on openBecame L of day

Slide 2

Market looks for direction early in dayTries one way50% of time, decides it is the wrong way

Test of support or resistance can be very strongStill will reverse 50% of time

/17


Early BO: What Is Chance H or L of Day Already Formed?

Slide 3

/17

At the close of any bar,what is the chance that either the H or L of the day has already formed?

The 1st bar has 20% chance of being either the H or L of the day

Bar 12 By the close of the bar,50% chance the day has already made either the H or LThere is often a 7 am report at the close of bar 6 that is catalyst

By the close of the 1st hour (bar 12),70% chance the day has already made either the H or L

Bar 7


Early BO: What Is Chance H or L of Day Already Formed?

Slide 4

/17

By the close of bar 80,99.9% chance the day has already made either the H or LKnowing this does not help trading

Nothing magical about the number 18Bar 16 has a slightly lower % chanceBar 23 has a slightly higher % chanceTraders just need an approximate time when the probability is high

By the close of bar 18 (90 min)90% chance the day has already made either the H or L

Bar 18


BOM on Open: 2 Types, But Often The Same

BO of range of 1st 18 barsBreakout Mode (BOM)

Look for BO and thenabout a Measured Move (MM)

Bar 18

Bar 18

Slide 5

Bear BO, so 90% chance of either bear day or TR day

Today, bull BO, so 90% chance ofeither bull day or TR day

Here, also 18 bar BO Here, not BOM since never went above H of bar 1

/16

BO ModeAfter 10th bar:Reversal down from new Hand up from new L







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Slide

Slide 6

Main Points: H or L of Day Forms Early


BOM on Open: Bull BO, Then MM Up

Slide 7

Bulls got MM up

/16

BO ModeAfter 10th bar:Reversal down from new Hand up from new L

OK to buy early

Bull BO of opening range


BOM on Open: Sell BO below Reversal up for MM Down

Slide 8

BO Mode: TR Open, about half of average day’s rangeAfter at least 5 - 10 bars Reversal down from above 1st bar,Reversal up from below 1st barEither can come 1st

Sell PB, which is often deep, since early TRCan even be Always In Longand still continue down if no new H of day

50% chance of BO up or downThen, look for MM (here, fell much more)Buy above the H with stop at new L of daySell below the L with stop at new H of day

Today had bear BO, so 90% chance of either bear day or TR day

/17


BOM on Open: Sell BO below Reversal up for MM Down

Slide 9

/17

When initial range is less than 10 bars, some computers will wait to see if bigger opening range forms,then sell the BO

Another reversal upso new BOM range


BOM on Open: If Pattern Is Small, Wait for Follow-Through

Slide 10

BO Mode, but too few bars

/17

Higher probability of MM down if wait to sell bear follow-through bar

BO Mode B, but ok to wait to buyfollow-through barsince higher probability when buying BO of Tight TRTight TR means Limit Order Market,not good BOM

Became bigger BO Mode pattern,but still only 9 bars and Tight TR

Got BO Mode sell


BOM with Bull BO: 90% Chance of Bull Trend or TR

Slide 11

After 1st bar:Reversal down from new H and up from new L Range is about half of average day

/17

Buy BO and PB90% chance of bull trend or TRToday was mostly TR


BOM on Open: Buy BO above Reversal down for MM Up

Slide 12

/17

BOM traders buy bull BO

BO Mode since after 1st bar:Reversal up from new L,then down from new H

Before BO, bears sell DT at MA (Opening Reversal down)Bulls buy HL MTR

Sometimes swing traders have to take several trades before there is a trend







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Slide

Slide 13

Main Points: Early BO - Breakout Mode or 18 Bar BO


18th Bar: Look for BO or Reversal between Bars 16 - 20

Slide 14

Buy above bull bar after failed BO below LAfter BO to new H,90% chance Emini will stay above L of dayTherefore either bull trend day or TR day

/17

Bar 18 so look for either strong BO or reversalOK to buy DB PB to MA

After early reversal down from new H,pay attention if then get new LBuy reversal upBulls will buy early, hoping for BOM and bull BO


BO below 18 Bar Range: TR Day

Slide 15

/17

90% chance the H will remain the H of the dayor for most of day

Bar 18

Late new HMost reversal days do not go very far above H

If no clear trend by bar 18, trend will probably start soonLook to trade BO or reversal

Sell BO to new L after bar 182 big bear bars so strong momentum down

Sell failed BO above H since now around 18 bars into dayBear sell signal bar, 2nd entry sell, so higher probability of swing down

Buy HL MTR


3rd failed break below yesterday’s lowso Wedge BottomBuy reversal upGetting close to bar 18so possible L of day

BOM on Open: Many New Highs and Lows

/17

Sell failed bull BO of BO Mode (18 bar BO often also BOM)Only 7 bars in opening range so may not be complete yetIncreased chance of failed BO

Buy BO above opening range and buy PB from BORange has 21 bars so 90% chance that L will remain L of day

Bar 18

Slide 16

Then, failed bear BO of bigger BO mode,but still only 10 bars in opening range and might need more barsBO has lower probability of trend until TR has 10 or more bars


BOM of 1st 18 Bars: Often Goes Sideways

Slide 17

/17

Buy BO to new H of the day after bar 1890% chance the L will remain the L of the dayand day will be either bull trend day or TR dayOften just goes sideways or weak channel

Bar 18

Between Bars 15 -25, traders will buy reversal up from near lowIf near H, they will sell reversal down


BTC: Deep PB so TR Day Likely

Slide 18

1/17

Buy failed BO below 18 bar range,especially since TR dayGot rally, but not new H of day

Bar 18

Expanding Triangle so entering on reversals is higher probability than betting on breakoutsOnly sell after strong bear BO and follow-through (did not get it)







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Slide

Slide 19

Main Points: Failed BO of Yesterday’s H or L


Failed BO of Yesterday’s H or L: 2nd Signal

Slide 20

Failed BO above yesterday’s H2nd entry sell so higher probability of profit

Failed BO below yesterday’s L2nd entry buy so higher probability of profit

/17


2nd Failed BO H of Yesterday: Micro DT

Slide 21

Wedge Bull Flag after gap upHL MTR, Micro DBToo late to also call it an Opening Reversal up

Micro DT soL2 Opening Reversal downfrom H of yesterday

/16

On the open, if the market reverses down from above yesterday’s high, it might be making the H of the dayHigher probability is 2nd signal


2nd Failed BO above Yesterday’s H: Strong Bear

Slide 22

Sell failed BO above yesterday’s high2nd entry sell, below bear bar closing on low,and from higher HAll create higher probability sell

/17

L1

L2


ORV: 2nd Reversal down from Yesterday’s High

Slide 23

/17

Failed BO above yesterday’s highSell 2nd reversal down (Opening Reversal)Want bear signal bar

Stop


Failed BO above Yesterday’s H: 2nd Sell Signal

H1 after strong reversal upHL MTRMight get back above yesterday’s high

Rallied to back above yesterday’s H

Parabolic Wedge BottomBuy reversal up from Micro DB 2nd failed BO below yesterday’s low

2nd entry sell, Wedge rallyYesterday had a small range so possibly outside down day

2017

Slide 24

Sell failed BO above yesterday’s H, 2nd entry sell


ORV: 2nd Reversal up from below Yesterday’s Low

Slide 25

/16

Failed BO below yesterday’s lowBuy 2nd reversal up (Opening Reversal)Want bull signal bar

Stop


2nd Failed BO below Yesterday’s L: Reversal Day, Doji Day

Close near openso doji day

/17

2nd failed BO below yesterday’s LBear buy signal barOk to buy above bull bar

Slide 26


PW Bottom: 2nd Failed BO below Yesterday’s Low

Slide 27

/17

Buy 2nd entry reversal up frombelow yesterday’s lowStrong bull buy signal barParabolic Wedge Bottom

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Rallied to back above H


ORV Up: 2nd Failed BO below Yesterday’s Low

Slide 28

Failed BO below yesterday’s low2nd entry buy above bull bar closing on high

Big Down after Big UpBig confusion so probable TR

/17


Gap Down: Failed BO below Yesterday’s Low, 2nd Entry

Slide 29

Wedge Opening Reversaldown below MA

Failed BO below yesterday’s low,2nd entry buy

/17

HL MTR

Sometimes need several entriesbefore get swing trade, andsometimes none leads to swing

DB HL MTR







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Slide

Slide 30

Main Points: Trend Resumption after failed reversal


Failed BO above H of Yesterday: 2nd Entry Sell Failed

Gaps after BOPossible Small PB Bullinstead of Trending TR DayOnly buy

Disappointing follow-throughHolding above MABears exit, or above H of day

Sell 2nd failed BO of H of yesterday

/17

Failed Buy The Close at end of dayStarted too early

All-Time H

Slide 31


Failed BO above H of Yesterday: 2nd Entry Short Failed

/17

Failed BO above yesterday’s H2nd entry sell failed

Slide 32

Wedge Top, 2nd entry sell

Buy reversal up above strong bull bar


Failed BO Low of Yesterday: 2nd Reversal Up

/17

Failed BO below yesterday’s L Bigger pattern, 2nd entry buy, Lower LConsecutive Bottoms so higher probabilityBuy reversal up above bull bar

Slide 33

Sell Wedge Opening Reversal down from below MA

Buy HL MTR failed bear BO

Buy Failed BO below yesterday’s L2nd entry B, but failed HL,just below MA, so less reliable







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Review


Al Brooks

How to Trade Price ActionBrooks Trading Course

Trading Opening Breakouts and

Reversals

Futures.io October 17, 2017

trading opening breakouts and reversals...bo on open: 50% reverse, no matter how strong strong rally...

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