As a reminder, Alan's method is first and foremost price action. The box serves as a structure to create
- Trading Opportunities
- Targets and
The most important aspects are
- Take only the best qualities setups
- Focus on identifying follow through bars
- Never fade a zone (ie, never sell a support zone, never buy a resistance zone); and
- Use PVAC guidelines
The folloiwng pages go into the price action strategies that Alan has shared to take advantage of trading opportunities ("setups"), protections ("stops"), and targets (pattern and setup completions). are summarized in subsequent pages.
Price action is viewed by Alan in many ways, but to keep it simple, there are two areas of focus: bar relationships to nearby bars and larger pattern completions.
Very generally, bar relationship type patterns create shorter trading opportunities ("scalps") whereas the pattern completions allow for either pyramiding onto a trade, or holding a trade into the close of the day. This of course applies to trading from the 10-minute box.
As price moves across the box zones and angulars, the push-pull and emotional extremes can be exploited by the trader when viewed as territory gained or lost; proximity areas of protection or open areas of exposure; and pattern completion targets.
To lay the groundwork, this page presents a few ideas about how to approach the box through its components. However, Central to all the strategies, learning to identify quality follow-through (FT) bars is the most important concept, followed by Violations. FTs and Violations will over-ride, or at worst 'shade' the broadly general 'reads' of angulars, bars, and zones.
If you plan to use this method, your time would be well spent studying the FT bar concept.
Additionally, setups arise through the creation of obligations and return-side targets (VBTs, 2Z, Apex splitters, 123s, pattern completions).
Early Read of Chart
- Territory: Win it, Prove it, Lose it
- Follow through (FT ) bars
- Bars1, 2, 8, 11
- Apex Splitters
- Fade4th of anything
Once Chart1 is drawn, at 8.20am ET), quickly assess Bar1, and then, Bar2 characteristics using these guidelines:
- Proximity of Bar1 to nearby angulars and horizontals
- The placement Bar2
- Above, below, or through the H, L, or Mid
- If through the H, L, or Mid, this creates a 2Z possibility for Bar2
- Above, below, or through a quartile
- Example of an Early Read
- Chart2 can also be used as an early read for Chart1
Angulars (image of Box parts)
Zones (image of Box parts)
To recap, there are four zones and two Apexes
- Support (SZ)
- Resistance (RZ)
- Neutral (NZ)
- Dead Zone (DZ)
- Apexes (not technically zones, but the meeting point of various zones)
The "flag areas", ie, left and right of an apex where the zones meet, are closed-in, "boxing-in" price and thereby diminishing the potential for rewarding a position taken nearby. The best setups happen high up in a Resistance Zone and lower down in a Support Zone.
There are also areas of proximity protection, eg, a price line where a trader can put his stop and protect his position, such as a major angular.
The guidelines below are general. Bear in mind the previous caution that FT-bars in particular and many times Violations, will take precedence. Incorporate your study of FTs and Violations when using the Zone guidelines.