Trading Price Action Reversals Technical Analysis of Price Charts Bar by Bar for the Serious Trader

by Brooks, Al

• ISBN13: 9781118066614
• ISBN10: 1118066618
• Edition: 1st
• Format: Hardcover
• Copyright: 2012-01-24
• Publisher: Wiley

Summary

A trend doesn't last forever and it transitions into either a trend in the opposite direction or into a trading range. When a trend reaches some critical magnet, it stalls and starts to pullback. If the pullback extends too far, traders do not know if the trend will resume or if the market will reverse and then trend in the opposite direction. Because the market often goes very far after a reversal takes place and the protective stop can be very small, the risk reward ratio is excellent and this keeps traders looking for them constantly. There are many types of reversals and each has specific characteristics that traders can use in their trading. There are several other important topics that need to be discussed and they are included in this volume. Price action analysis works on all time frames but there are different techniques that traders can use in trading intraday, daily, weekly and monthly charts. For example, a day trader can use an always in approach where he is in the market all day long, switching to long or short depending on the price action. Many markets now trade on the Globex almost 24 hours a day and the Forex is also a 24 hour market. Both provide trading opportunities. The first hour of the day session of every market provides some of the best trading of the day if you understand how to handle the volatility and why the sharp reversals are taking place. Options are also great tools for trading 60 minute and daily charts because they contain your risk on overnight positions. Even though there are countless setups some are better than others and these are discussed in the chapter on the best trades. The book ends with many general guidelines that will help traders handle the emotions that come while trading.

Author Biography

AL BROOKS is a technical analysis contributor for Futures magazine and an independent day trader. His approach to reading price charts was devel-oped over two decades in which he changed careers from ophthalmology to trading. Brooks graduated from The University of Chicago Pritzker School of Medicine in 1978 and received a BS in mathematics with honors from Trinity College in 1974. His website, brookspriceaction.com, outlines his trading approach and views as well as hosts a subscription-based daily trading chat room in which Brooks talks with other traders about the market.

Table of Contents

Acknowledgments	p. vi
List of Terms Used in This Book	p. xiii
Introduction	p. 1
Trend Reversals: A Trend Becoming an Opposite Trend	p. 35
Example of How to Trade a Reversal	p. 73
Signs of Strength in a Reversal	p. 79
Major Trend Reversal	p. 83
Climactic Reversals: A Spike Followed by a Spike in the Opposite Direction	p. 111
Wedges and Other Three-Push Reversal Patterns	p. 151
Expanding Triangles	p. 181
Final Flags	p. 189
Double Top and Bottom Pullbacks	p. 217
Failures	p. 225
Huge Volume Reversals on Daily Charts	p. 257
Day Trading	p. 261
Key Times of the Day	p. 263
Markets	p. 271
Time Frames and Chart Types	p. 273
Globex, Premarhet, Postmarket, and Overnight Market	p. 287
Always In	p. 293
Extreme Scalping	p. 317
The First Hour (The Opening Range)	p. 331
Patterns Related to the Premarket	p. 353
Patterns Related to Yesterday: Breakouts, Breakout Fullbacks, and Failed Breakouts	p. 357
Opening Patterns and Reversals	p. 373
Gap Openings: Reversals and Continuations	p. 395
Putting It All Together	p. 401
Detailed Day Trading Examples	p. 403
Daily, Weekly, and Monthly Charts	p. 415
Options	p. 431
The Best Trades: Putting It All Together	p. 455
Trading Guidelines	p. 527
About the Author	p. 541
About the Website	p. 543
Index	p. 545
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