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Meanders
amg's Trading Articles
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Part1: - Early Read of Chart - Angulars - Zones |
Part2: - Territory: Win it, Prove it, Lose it - Follow through (FT ) bars - Bands |
Part 3: - Bars1, 2, 8, & 11 - VBT (Vacuum Back Targets) - Fade 4th of Anything - 2Z - Apex Splitters |
Part 4: - 123s - Misc |
Chart1 numbers bars starting with Bar1 at 8:20-8:20ET, Bar2 follows, and so forth. There are a total of 48 (*) bars in the day, 23 of which have the potential of being in the DZ, and one of which (Bar1) is never traded. (*) edit: new as of 23 Aug 2005
Bar1, Bar2, Bar8, and Bar11 carry the greatest pattern significance in his method. However, every bar counts and its shape, placement in the box, and placement with respect to surrounding bars, gives the trader price action information he can use.
'Fleece bars' are long bars which lure overly-emotional traders in, but quickly reverse to 'fleece' traders of their money. Bar8, which is the opening 10m bar, and Bar11, which is the end of the first 30m opening range, provide such opportunities which box traders can use.
Alan will initiate a trade only after the close of a 10m bar. The only exceptions are Bar2, Bar8, and Bar11, which he will trade within its open and close.
Bar1 - the 8:20 bar
Bar 2 - the 8:30-8:40ET bar
Only Bar2 can “uncheck” Bar1 (ie, only Bar2 can over-ride a read from Bar1)
Only Bar2 Open as it relates to Bar1 Close is used:
Bar 8 - the Open Bar, 9:30-9:40ET
- Bar8 has only one rule: If Bar8 is at or near the LOD (low of day), Do not short
- A Bar8 long is a quick, TMAR trade (Take the Money and Run)
Bar 11 - The end of the 30m Opening Range, 10:00-10.10ET
- Alan will not buy a Bar11 HOD
- Treat as a high probability fleece bar at or near HOD (high of day) for a TMAR short
- Use on V and A days (see PVAC)
Bar11 HOD Example
VBTs (Vacuum Back Targets) rev: 01 Jul 05
VBT Described: If an up bar breaks up through a down angular or if a down bar breaks down through an up angular, the price where the bar cut through the angular creates a VBT. When this happens, place a short horizontal line at that price point, which is now a return target for price later in the session.
VBTs exist to provide price targets. They are not themselves entries. When the VBT is created higher up in a resistance zone, or lower down in a support zone, the greater the potential for a high quality return target. The lower the quality of a subsequent entry, the more at risk is meeting the VBT target. Keep in mind the idea of proximity providing protection and "open space" providing exposure.
The VBT remains in effect until a subsequent price bar prints the VBT
price, at which point the VBT is considered “checked”, ie, closed, and no
longer in play. The very next bar cannot(*)
uncheck a vbt.
[(*) 01 Jul 05 correction]
1-2-3 and 4th, a.k.a, “Fade the Fourth Whatever”
The 123 pattern is a typical technical analysis pattern. The principle is simple: having conditioned traders to anticipate a successful test of a prior extreme three times, the forth attempt will be taken by the inexperienced traders and faded by those who are aware of the pattern.
Alan does not count HH or LL swing-to-swing, but rather bar-to-bar. Fading a fourth HH would thus be the fourth higher high of a bar sequence. However, the fourth HH of a swing sequence is also faded. Similarly, on trending days, fade the fourth band move.
A 2Z is a bar that opens in one zone, travels through another, and closes in a third zone. The 2Z bar creates an obligation, ie, price will return to test the open of the 2Z bar.
An Apex Splitter is a bar that traverses one of the two major Apexes. Expect a reversal within 30m (3 bars).
Next: Price Action Strategies, Part 4
Back: Price Action Strategies, Part 2
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