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

479 Pages·2012·51.65 MB·English

by  Al Brooks

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Trading
Price
Action
TRENDS
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Trading
Price
Action
TRENDS
TECHNICAL ANALYSIS OF PRICE CHARTS
BAR BY BAR FOR THE SERIOUS TRADER
AL BROOKS
John Wiley & Sons, Inc.
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Copyright (cid:2)C 2012 by Al Brooks. All rights reserved.
The first edition of this book, titled Reading Price Charts Bar by Bar: The Technical Analysis of Price
Action for the Serious Trader, was published in 2009.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
All charts were created with TradeStation. (cid:2)C TradeStation Technologies, Inc. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as
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LibraryofCongressCataloging-in-PublicationData:
Brooks,Al,1952–
Tradingpriceactiontrends:technicalanalysisofpricechartsbarbybarfortheserioustrader/Al
Brooks.
p.cm.–(TheWileytradingseries)
“Thefirsteditionofthisbooktitled,Readingpricechartsbarbybar:thetechnicalanalysisofprice
actionfortheserioustrader,waspublishedin2009”–T.p.verso.
Includesindex.
ISBN978-1-118-06651-5(cloth);ISBN978-1-118-16623-9(ebk);
ISBN978-1-118-16624-6(ebk);ISBN978-1-118-16625-3(ebk)
1.Stocks–Prices–Charts,diagrams,etc. I.Brooks,Al,1952–Readingpricechartsbarbybar.
II.Title.
HG4638.B765 2012
332.63(cid:3)2042–dc23
2011029297
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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Iwouldliketodedicatethisbooktomywonderfullykinddaughter,TessBrooks,
whoseeslifeasfilledwithopportunitiesandseeksthemoutaroundtheworld
withouthesitation.Sheisabold,originalthinkerandadoer,andfillsherlife
withthedreamsthattherestofushavebutaretooafraidtopursue.
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Contents
Acknowledgments xi
List of Terms Used in This Book xiii
Introduction 1
PART I Price Action 35
CHAPTER 1 The Spectrum of Price Action: Extreme
Trends to Extreme Trading Ranges 55
CHAPTER 2 Trend Bars, Doji Bars, and Climaxes 59
CHAPTER 3 Breakouts, Trading Ranges, Tests,
and Reversals 77
CHAPTER 4 Bar Basics: Signal Bars, Entry Bars,
Setups, and Candle Patterns 83
CHAPTER 5 Signal Bars: Reversal Bars 89
CHAPTER 6 Signal Bars: Other Types 101
CHAPTER 7 Outside Bars 155
CHAPTER 8 The Importance of the Close of the Bar 169
CHAPTER 9 Exchange-Traded Funds and
Inverse Charts 173
vii
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viii CONTENTS
CHAPTER 10 Second Entries 177
CHAPTER 11 Late and Missed Entries 181
CHAPTER 12 Pattern Evolution 185
PART II Trend Lines and Channels 191
CHAPTER 13 Trend Lines 195
CHAPTER 14 Trend Channel Lines 209
CHAPTER 15 Channels 219
CHAPTER 16 Micro Channels 249
CHAPTER 17 Horizontal Lines: Swing Points
and Other Key Price Levels 269
PART III Trends 275
CHAPTER 18 Example of How to Trade
a Trend 289
CHAPTER 19 Signs of Strength in a Trend 307
CHAPTER 20 Two Legs 319
PART IV Common Trend Patterns 323
CHAPTER 21 Spike and Channel Trend 325
CHAPTER 22 Trending Trading Range Days 359
CHAPTER 23 Trend from the Open and Small
Pullback Trends 383