3 Patterns Every Trader and Investor Should Know Flashcards by Khoi Nguyen Minh

Price Action

Price Action

How well did you know this?

Not at all

Perfectly

TRADE ALL MARKETS THE SAME ! Look for Patterns (Price Action)

TRADE ALL MARKETS THE SAME ! Look for Patterns (Price Action)

How well did you know this?

Not at all

Perfectly

What are 3 common Pattens?

BO, PB, Reversal

How well did you know this?

Not at all

Perfectly

Small PB Bull Trend - Many Bull Bars Closing on Their Highs

Small PB Bull Trend means PBs are shallow & usually on last a few bars

Strong Bull BO on Higher TF

ONLY BUY

Unusual so unsustainable and a Buy Climax, Bulls will keep Buying until Reversal

Many see strong Rally & cannot figure out how to get long, they are afraid to have a WIDE Stop far below, it is better to Buy on a Stop above H of previous Bar

Trade Small and use correct Stop OR, Buy option Calls(lower risk trade)

RAISE STOP AFTER EACH STRONG BO

Small PB Bull Trend - Many Bull Bars Closing on Their Highs

Small PB Bull Trend means PBs are shallow & usually on last a few bars

Strong Bull BO on Higher TF

ONLY BUY

Unusual so unsustainable and a Buy Climax, Bulls will keep Buying until Reversal

Many see strong Rally & cannot figure out how to get long, they are afraid to have a WIDE Stop far below, it is better to Buy on a Stop above H of previous Bar

Trade Small and use correct Stop OR, Buy option Calls(lower risk trade)

RAISE STOP AFTER EACH STRONG BO

How well did you know this?

Not at all

Perfectly

Small PB Bull Trend: Many Small Bodies & Prominent Tails

Bars are small and tails are prominent but PBs are shallow & only lasting 1-3 bars

Looks like will soon convert to TR but never does

MANY GAPS, Sign of EAGER BULLS

ALL Bull Trends constantly form wedge Tops, they usually fail and create small PBs

Better to ONLY BUY!

Small PB Bull Trend: Many Small Bodies & Prominent Tails

Bars are small and tails are prominent but PBs are shallow & only lasting 1-3 bars

Looks like will soon convert to TR but never does

MANY GAPS, Sign of EAGER BULLS

ALL Bull Trends constantly form wedge Tops, they usually fail and create small PBs

Better to ONLY BUY!

How well did you know this?

Not at all

Perfectly

Small PB Bull Trend = Buy for ANY reason

Buy above Bull Bars in a PB

Buy Close of Bull Bar Closing Near its Highs

Buy Bear Closes

Buy @ EMA

Buy Below Prior Bar, especially if Bull Bar

*After each BO to a new High, raise stop to below bottom of that leg up!

Small PB Bull Trend = Buy for ANY reason

Buy above Bull Bars in a PB

Buy Close of Bull Bar Closing Near its Highs

Buy Bear Closes

Buy @ EMA

Buy Below Prior Bar, especially if Bull Bar

*After each BO to a new High, raise stop to below bottom of that leg up!

How well did you know this?

Not at all

Perfectly

High 1 Bull Flag: One Small Leg Down in Bull Trend or TR

High 1 Bull Flag: One Small Leg Down in Bull Trend or TR

How well did you know this?

Not at all

Perfectly

High 2 @ TR Top - 2 Legs Down in Bull Trend/TR

High 2 @ TR Top - 2 Legs Down in Bull Trend/TR

How well did you know this?

Not at all

Perfectly

Wedge Bull Flag - 3 Legs Down in Bull Trend/TR

*In a High 1/2/3 Trade Buys above a Bull Bar increases the probability of the Trade

Wedge Bull Flag - 3 Legs Down in Bull Trend/TR

*In a High 1/2/3 Trade Buys above a Bull Bar increases the probability of the Trade

How well did you know this?

Not at all

Perfectly

H1 & H2 & H3 Buy Setups - PB in Bull Trend/TR

H1, H2, and H3 are PBs in a Bull Trend or TR

Beginners should look for STRONG BULL TREND

*Higher probability of profit when buying above bull bar that closes near its high

*Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup(H1 Bull Flag)

H1 & H2 & H3 Buy Setups - PB in Bull Trend/TR

H1, H2, and H3 are PBs in a Bull Trend or TR

Beginners should look for STRONG BULL TREND

*Higher probability of profit when buying above bull bar that closes near its high

*Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup(H1 Bull Flag)

How well did you know this?

Not at all

Perfectly

Is every DB a H1 or a H2?

Every DB is a H2

How well did you know this?

Not at all

Perfectly

H1 Bull Flag - *Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup (H1 Bull Flag)

H1 Bull Flag - *Once Bar goes above prior bar in PB, PB is a High 1 Buy Signal Setup (H1 Bull Flag)

How well did you know this?

Not at all

Perfectly

If Bears Twice try to selloff and fail, they will give up, it creates a High 2 Bull Flag (H2)

Buy above Bull Bar since bears will Exit with a LOSS

If Bears Twice try to selloff and fail, they will give up, it creates a High 2 Bull Flag (H2)

Buy above Bull Bar since bears will Exit with a LOSS

How well did you know this?

Not at all

Perfectly

Big High 2 Bull Flag - Opening Reversal Up from EMA

Big High 2 Bull Flag - Opening Reversal Up from EMA

How well did you know this?

Not at all

Perfectly

a Wedge Bottom = a Sell Climax; it usually ATTRACTS Profit Taking and Bulls will Buy for a Swing Up

How well did you know this?

Not at all

Perfectly

Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax

Having at least one OVERSHOOT in the Wedge is GREAT for the Wedge Context

Bears who Buy Back shorts typically wait for 2 Legs up before selling again, they give bulls a chance to create a Trend Reversal

Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax

Having at least one OVERSHOOT in the Wedge is GREAT for the Wedge Context

Bears who Buy Back shorts typically wait for 2 Legs up before selling again, they give bulls a chance to create a Trend Reversal

How well did you know this?

Not at all

Perfectly

Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax

Reversal up from Wedge Bottom usually has 2 or more legs up

Big Bull Bar late in Bull Trend is a Buy Climax

Wedge Bottom - 3 Legs Down in Bear Channel; Wedge Bottom = Sell Climax

Reversal up from Wedge Bottom usually has 2 or more legs up

Big Bull Bar late in Bull Trend is a Buy Climax

More Ways to Draw a WEDGE BOTTOM the more likely I will get a Reversal Up.

This is because the more computers thinking there will be a reversal up due to these wedge bottoms the MORE LIKELY the reversal up will occur.

Even though they’re different ways to draw the Wedges the bottom is the same for ALL again this increases the chances of a Reversal up

More Ways to Draw a WEDGE BOTTOM the more likely I will get a Reversal Up.

This is because the more computers thinking there will be a reversal up due to these wedge bottoms the MORE LIKELY the reversal up will occur.

Even though they’re different ways to draw the Wedges the bottom is the same for ALL again this increases the chances of a Reversal up

The market often transitions into a new Trend before old Trend Ends

The market often transitions into a new Trend before old Trend Ends

Wedge Bottom - Strong Buy Signal Bars

Assume 50% Chance BO below wedge bottom will fail and there will be a reversal up

and a 50% Chance the BO will succeed and there will be a trend resumption.

If stopped out, you can look for another bottom to Buy

Wedge Bottom - Strong Buy Signal Bars

Assume 50% Chance BO below wedge bottom will fail and there will be a reversal up

and a 50% Chance the BO will succeed and there will be a trend resumption.

If stopped out, you can look for another bottom to Buy

Nested Wedge Bottom - Exhaustive Sell Climax

Biggest Bear Bar late in Bear Trend in confluence with 2 Wedge Bottoms(Making it a Nested Wedge)

Nested Wedge Bottom - Exhaustive Sell Climax

Biggest Bear Bar late in Bear Trend in confluence with 2 Wedge Bottoms(Making it a Nested Wedge)

Wedge Bottom - Wait for Good Buy Signal Bar

Wedge Bottom but bad initial Buy signal Bat and consecutive Bear Bars

Wait for PB from 1st reversal up & buy above a bull bar closing near its high

Many Bull bars Closing near their Highs this means Buying Pressure is increasing = Increases Chances of market going HIGHER

Wedge Bottom - Wait for Good Buy Signal Bar

Wedge Bottom but bad initial Buy signal Bat and consecutive Bear Bars

Wait for PB from 1st reversal up & buy above a bull bar closing near its high

Many Bull bars Closing near their Highs this means Buying Pressure is increasing = Increases Chances of market going HIGHER

Wedge Bear Channel - can Be Bull Flag or Bull Trend Reversal

Wedge Bear Channel - can Be Bull Flag or Bull Trend Reversal

Strong 2nd Leg - Might Be New 1st Leg

Wedge Bottom, but 6 consecutive bear bars

No good Buy Signal Bar; minor reversal up is likely

Wait for better bottom to Buy

Strong 2nd Leg - Might Be New 1st Leg

Wedge Bottom, but 6 consecutive bear bars

No good Buy Signal Bar; minor reversal up is likely

Wait for better bottom to Buy

If the Market is in a Strong Bear Trend it will always be forming Wedge Bottoms and I should not be looking for Reversal UP

Many Strong Bull Bars - Better Chance of Reversal Up

In TRs patterns often look bad but they can still be Tradable. Wedge Bottom can indeed look as though it is bad shape in a TR but still be effective

Tight Bear Channel - Only LOOK TO SELL! There is a Wedge Bottom but The Tight Bear channel means Small PB Bear Trend THEREFORE Only Look to SELL!

**Wedge Top - PB from 1st Leg is Usually Right Shoulder of HST** Nested Wedge in this Wedge Top increases the odds of the bears Creating a Successful Reversal Whenever I get a Wedge and than a LH it is also a HST (were the Left Shoulder is the 2nd leg up in the wedge and I am expecting a 2nd Leg down)

Wedge Top - After 2 Strong Legs Down

**Wedge Top - Often has 4 - 5 Legs Up** Sell Reversal down from Top of the Wedge If I get stopped out and the premise is still valid look to SELL again Consecutive Tp[s have higher Probability When a Wedge has a Strong 2nd Leg up, many Computers start count over again However if I think there is to much Buying Pressure stay out of the Trade; When in Doubt Stay Out

Every Strong Bull Trend is constantly doing what?

Every Strong Bull Trend is constantly forming Wedge Tops that FAIL

Most if not ALMOST all MTR Reversal begin with a Wedge Top or Wedge Bottom

**Wedge Bull Channel - Failed BO Above** BO above Wedge Top has a 50% chance of a swing up And, a 50% chance of a Reversal down, like here on this chart

**Tight Bull Channel - DO NOT SELL WEDGE TOP** The Tight Bull Channel has way to Much Buying Pressure to take a Short Trade Every Strong Bull Trend is constantly forming Wedge Tops that FAIL

**Wedge Top - Often has a Teat of High and Forms a DT** 75% of the time Bull Channels (aka Wedge Tops) have a Bear Break and the BO usually leads to a minor reversal before it evolves to a TR or Trend Reversal

**Parabolic Wedge Top - Endless PB, Then Bear Reversal Day** \*3 Pushes up in a Tight Bull Channel is a Parabolic Wedge Climax Wedge Channel and a BUY CLIMAX (this attracts profit taking and sometimes forms a reversal down!)

**Truncated Wedge - 3rd Leg up Did not Make a New High** **_Truncated Wedge_** = 3rd Leg up does not go above 2nd leg up but there are still 3 pushes up; This can also be viewed as a DT

What is a Truncated Wedge?

3rd Leg up does not go above 2nd leg up but there are still 3 pushes up; This can also be viewed as a DT