Videos 17 A&B: Tight Channels and Micro Channels

Question 1

Define a Tight Channel

Answer 1

When there is not much space between the lines.

Usually a breakout on a higher time frame
Only trade in the direction of the trend.
Very difficult to make money shorting

Question 2

Look at the bonus video cards on Bull Channels. A lot of this information is repeated.

Question 3

Parameters of a tight channel

Answer 3

Pullbacks are less than twice the size of an average bar

Pullbacks are less than 2-3X size of smallest scalp.

Question 4

Define Microchannel

Answer 4

No pullbacks
Small Pullback Trend, tiny pullbacks
Tight trading range, horizontal channel

Question 5

Define Small Pullback Trend

Answer 5

Micro Channel, no pullbacks
Small Pulback Trend, tiny pullbacks
Parabolic Wedge
Tight Trading Range, horizontal channel
Pullbacks are likely only 1-3 bars

Question 6

Define Parabolic Wedge

Answer 6

A type of tight channel. Three pushes up in the photo.
Often does not look like a wedge shape
Usually climactic, and goes above the line for a failed breakout.

Question 7

Some Micro Channel characteristics

Answer 7

Needs 2 lines
Lines converging
Extreme form of Tight Channel
No pullbacks
The channel line adds nothing to it, so you don't have to draw it. Only need to see micro trend line.

Question 8

Can use the 1-min chart to find a pullback to enter on instead of waiting for 5-min to close

Answer 8

Question 9

When you have a strong trend like you see in the photo, you will not make money by selling.

Answer 9

Don’t sell

Best the bears can get is a trading range.

Question 10

Signs of Selling Pressure

Answer 10

No pullbacks is bears selling below high of prior bar, so eager to sell at or above bar.
Strong bear trend. Don’t buy

Question 11

Measuring Gap

Answer 11

Here’s an example of a measured move/measuring gap
Strong breakout early in trend is more likely to be Measuring Gap. Strong move down based on the height of the strong bear breakout

Question 12

Exhaustion Gap

Answer 12

In photo: 8 bar bear Micro Channel late in bear trend (after 20 bars)
Micro Channel is breakout
Strong breakout late in trend more likely to be Exhaustion Gap
That is a major Lower High that led to a strong breakout.

Question 13

An exhaustive move in a Bear Micro Channel late in bear trend.

Answer 13

When you get a sell climax late in a bear trend, usually better not to take the sell.
Wait 5-10 bars to see if the bulls can reverse.