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I found these 2 examples on the Encyclopedia Sampler.
Both Parabolic climaxes .
However in the Bull case Al says that we can re enter in the direction of the trend above a bull bar after parabolic wedge top.
On the other hand he says to not sell below a bear bar after parabolic wedge bottom.
The only difference I notice is that in the bull case the signal bar allows an entry with some room until the Double Top. In the bear case the bear bar is right at the double bottom, but if we only looked at candle closes they would be almost identical.
Can someone explain the difference please ?
Hi Fabian,
I will try to answer the best way I can, I am learning too and this is what I think about this scenario.
The reason why Al said to now sell below a Bear Bar on the first slide after Parabollic Wedge Bottom I think it is because Bears got a Strong CX Bear Trend down with 3 clear legs, Bears also reached a MM based on the PA of the Open so Bears might be now taking profits after reaching targets and having 3 legs down. ( of course sometimes the market will drop like crazy but we are talking about probabilities here )
In the other hand, with the second slide, Al dosnt said to not sell, is more like if you took the Parabollic Wedge Top SB ( the reversal Bull doji Bar ) which is good, because we had and Open Up + Wedge Top ( this is one of the best scenarios to take a Short after Gap up ) you are betting on CX move Up after Gap Up + reversal, then you have a good Entry Bar ( good for Bears so selling is good) but at the end we had an awfull FT Bar for Bears, here some Bears will exit early above that Bull Bar because the market is still in AIL, and some other Bears will hold their trade and relly on thei SL above the Parabillic Wedge Top SB ( reversal Bull doji ). Also this Wedge Top is not as good as the Bear one, for me the Bear one had 3 clear strong legs, but the Bull one looks more like a tight channel Up for me.
It is not like he said dont sell that Bear Bar, is more like if you take a setup / premise ( Gap Up + Wedge Top with good SB = Price might go down atleast to reach EMA or any other magnet / target ) and then something happen ( Awfull FT ) that makes your setup less likely to succeed, you must ask yourself if your trade is as good as it was before or if you need to do some fixes
I hope it helps, maybe this is not the reason, but it is what I am able to see ^^
Have a nice day!
Fabian,
In addition to the points Alejandro mentioned, I'd like to add a couple.
In the first slide - there are 3 climaxes. With the last climax probably having the biggest bear bar in the whole trend. Further, it was late in the trend - I'd say roughly 20 bars in? Trends usually weaken over time. The odds of 3 consecutive Low 1s working, that too with the last one having a conspicuous tail below is low I'd say.
In the second slide - no clear 3 climaxes. Still early in the trend. The market turned AIL just a few bars back. The first BO formed a TR in the form of an ii and no strong bear bodies. Meaning, strong bulls took only partial profits and the market paused for a while. Bears did not step in. The market had a BO again above the ii and the strong bear bar could simply be a test of that ii TR as it acts as a magnet. The next bar slightly gapped up meaning bulls saw the test of ii as an opportunity to start buying again at support.
Hope that helps?
