Bar counting: What makes a good H2 or L2?

发表于 2011-2-10 12:17 AM | 显示全部楼层 |阅读模式

Remember, you are looking for a two-legged PB in a trend, so both the first and second leg actually have to pull back and not simply be in a MC. Otherwise, you have an L2 or H2 but not a very reliable signal.

Bar 1 is an L2 but not an entry because the mkt had been going up for about 10 bars so you need a clear second leg up and not just an L2 in something that looks like a channel. Also, the RB overlapped the prior bar too much so there was nothing to reverse (reversals reverse trends, not TRs), and that L1 was not a good enough show of strength by the bears.

So what do you do? Whenever something does not look good enough, just wait because there will be good setups all day, every day. The mkt was in a channel so an L2 is not reliable. What do you wait for? Some examples include a second entry in the form of a LH, an L4, and EMA G, or a third push up in the channel that could create a W, as it did here.

Bar 3 was a better L2 with a short entry near the top of the pattern (the small bear IB). Bar 4 was even better because it was clearly a HTF two legged move, and EMA G, and this second leg was a W (a channel with three small pushes in it).

Bar 5 was BW so you cannot be looking for anything unless you are a strong trader. It was the end of two legs down on the day, and BW can be a reversal pattern at a new LOD, especially when it is at the end of the second leg. In any case, you should not be trading BW unless you are a very good chart reader.

Bar 6 could also be seen as an L2 or an L4, but with this much BW, only the best traders should be trading. Two bars earlier, the mkt TO the H of an RB and therefore might have two legs up. You could look at Bar 6 as setting up a PB and the end of the first leg up. Is this good enough to place a swing short? I wouldn't. Does it look like it has better than a 70% chance of being a successful short scalp? I don't think anyone believes that. So you step aside and wait for clarity.

Abbreviation	Description
/	but
1P	First Pause or Pullback in a strong trend
20GB	Twenty Gap Bars, Twenty consecutive bars that have not touched the moving average
2BR	Two Bar Reversal
2HM	Two hours from moving average
4d	Four consecutive bear bars and is therefore too strong for a long
4u	Four consecutive bull bars and is therefore too strong for a short
5T	(5t F) Five Tick Failure: the market reversed at 5 ticks, so the scalp limit order was touched but likely not filled, and traders will be trapped
?	Possible
A2	A two legged PullBack to the Exponential Moving Average in a trend
A22	A second entry in a two legged Pullback to the Exponential Moving Average in a trend
AI	Always In
AIA	Always In Aggressive trader (takes every reversal, about 10 per day)
AIC	Always In Conservative trader (only takes the strongest reversals, about 2-5 per day)
AIL	Always In Long
AIS	Always In Short
ATM	At the Money option strike price
B	Buy
BAG	Breakaway Gap, the first gap of any kind after a trend reversal (only certain in hindsight)
BE	Breakeven
Bg	Buying
BGP	Buying Pressure
BO	Breakout
BP	Breakout Pullback
BPs	Breakout Pullbacks
Brs	Buyers
BT	Breakout Test
BTs	Breakout Tests
BW	Barb Wire
BX	Buy Climax
BXS	Buy Climaxes
C	Close
Cd	Closed
CH	Channel
COD	Close of Day
COM	Close of Month
COT	Close of Today
COW	Close of Week
COY	Close of Yesterday
CS	Closes
CT	Countertrend, against the trend of the past several bars or even of the entire day
DB	Double Bottom, which can even be two consecutive bars with identical lows
DBBF	Double Bottom Bull Flag, a horizontal pattern that contains a DoubleBottom and forming after a possible bottom
DBs	Double Bottoms, which can even be two consecutive bars with identical lows
DL	Dueling Lines
DP	a DoubleTop PullBack or a DoubleBottom PullBack
DPs	a DoubleTop PullBacks or a DoubleBottom PullBacks
DT	Double Top, which can even be two consecutive bars with identical highs
DTBF	Double Top Bear Flag, a horizontal pattern that contains a DoubleTop and forming after a possible top
DTs	Double Tops
EB	Entry Bar
EBs	Entry Bars
EG	Exhaustion Gap, a gap at any kind at the end of a trend, just before a reversal (only certain in hindsight)
EMA	Exponential Moving Average (I use a 20 bar)
EOD	End of Day
esp	especially
ET	Expanding Triangle
ETs	Expanding Triangles
F	Fail, Failure
FD	Failed
FF	Final Flag, usually a horizontal pattern after a trend. The breakout often fails and reverses
FFs	Final Flags
FG	Failing
FS	Fails
FT	Follow Through
FTCL	Failed Trend Channel Line
G	Gap
G2	A second entry on a gap setup
GB	Gap Bar
GBs	Gap Bars
H	High or High of Day
H1	1 legged pullback in a bull move
H2	2 legged pullback in a bull move
HH	Higher High
HHs	Higher Highs
HL	Higher Low
HLs	Higher Lows
HOD	High of the Day
HOO	High of opening range
HOT	High of Today so far
HOY	High of Yesterday
Hr	Higher
Hs	Highs
HSB	Head and Shoulders Bottom, a continuation pattern in both bull and bear markets that sometimes is a reversal pattern
HSBs	Head and Shoulder Bottoms, continuation patterns in both bull and bear markets that sometimes are reversal patterns
HST	Head and Shoulders Top, a bull continuation pattern in both bull and bear markets that sometimes is a reversal pattern
HSTs	Head and Shoulder Tops, bull continuation patterns in both bull and bear markets that sometimes are reversal patterns
HTF	Higher Time Frame (a 60 min chart compared to a 5 min)
HTFs	Higher Time Frames (a 60 min chart compared to a 5 min)
IB	Inside bar, the high of the bar is at or below the high of the prior bar and the low is at or above the low of the prior bar
ii	consecutive inside bars
iii	3 inside bars in a row
ioi	outside bar surrounded by inside bars
L	Low or Low of Day
L1	one legged PullBack in a bear move
L2	two legged PullBack in a bear move
LH	Lower High
LHs	Lower Highs
LHST	Left shoulder of a Head and Shoulders Top
lim	limit order
LL	Lower Low
LLs	Lower Lows
LOD	Low of the Day
LOO	Low of opening range
LOT	Low of Today so far
LOY	Low of Yesterday
Lr	Lower
Ls	Lows
MA	Moving Average
MAG	Moving Average Gap Bar
MAGS	Moving Average Gap Bars
MC	Microchannel
MG	Measuring Gap, a gap of any kind that can lead to a measured move (only certain in hindsight)
MGs	Measuring Gaps, gaps of any kind that can lead to measured moves (only certain in hindsight)
mkt	market
MM	Measured Move
MMs	Measured Moves
mo	momentum
MTCL	Micro Trend Channel Line
MTL	Micro Trend Line
MW	MicroWedge, a wedge formed by only 3 - 4 bars
OB	Outside bar, the high is at or above the high of the prior bar and the low is at or below the low
OD	OD = outside down bar (a OB with its C below its open and a body that is at least a third of its range)
OL	OverLap
OO	OutsideBar followed by a larger OutsideBar
OOD	Open of Day
OOM	Open of Month
OOT	Open of Today
OOW	Open of Week
OR	Opening Reversal
OTM	Out of the Money option strike price For example, if the OIH is at 101, then the 95 put and the 105 call are further than the 100 strike and are Out of The Money (the option strike prices are rarely exactly at the same price as the stock)
OU	outside up bar (a OB with its C above its open and a body that is at least a third of its range)
P	Probability
PB	Pullback
PBs	Pullbacks
poss	possible
prob	probably
PS	Probabilities
PT	Profit Target
pts	points
RB	Reversal Bar
RBs	Reversal Bars
RD	Reversal Day
RHST	Right shoulder of a Head and Shoulders Top
RR	Risk Reward, or Risk Reward Ratio, most easily thought of as the size of your stop compared to the size of your profit target
RRR	Risk Reward Ratio
SB	Signal Bar
SBs	Signal Bars
SC	Spike and Channel (bull or bear)
SCB	Spike and Channel Bottom (see book)
SCT	Spike and Channel Top (see book)
SCX	Spike and climax type of spike and channel
Sg	Selling
SGP	Selling Pressure
SH	Swing High
SHs	Swing Highs
SL	Swing Low
SLs	Swing Lows
Srs	Sellers
SS	Shrinking Stairs
STF	Shorter Time Frame (a 1 min chart compared to a 5 min)
STFs	Shorter Time Frames (a 1 min chart compared to a 5 min)
SX	Sell Climax
SXS	Sell Climaxes
T	Today or Tick (e.g., 5t = 5 tick move) depending on context
T1	1st Trend
T1B	Trend from the first bar or so of the day
T2	2nd Trend
T3	3rd Trend
TB	Trend Bar
TBs	Trend Bars
TC	Trend Channel
TCL	Trend Channel Line
TCL R	Trend Channel Line overshoot and reversal
TCLOS	Trend Thannel Tine OverShoot and reversal
TCLs	Trend Channel Lines
TD	Trend Day
TE	Traders Equation (chance of success times the reward needs to be greater than chance of loss times the risk)
TF	Time Frame
TFs	Time Frames
TL	Trendline
TLOS	Trend Tine OverShoot and reversal
TLs	Trendlines
TR	Trading Range
tri	Possible Triangle (5 or more increasing smaller or larger legs in a sideways pattern)
TRs	Trading Ranges
TT	Triple Top
TTR	Tight Trading Range
TTRD	Trending Trading Range Day
TTRDS	Trending Trading Range Days
TY	10 Year U.S. Treasury Notes Futures
vol	volume
W	Wedge or anything similar, like any 3 push pattern
W2	Wedge2, Wedge 2nd entry or a Failed Failed Wedge (a Wedge that failed, got a new extreme, and the new extreme failed and reversed)
Ws	Wedges or anything similar, like any 3 push patterns
WT	With Trend, in the direction of the trend of the past several bars or even of the entire day
X	Climax
Xs	Climaxes
Y	High Of Yesterday or Low Of Yesterday, or major Swing High or Swing Low from Yesterday
Y2	Yesterday's High or Low 2nd Entry
Ys	Y's = Yesterday's