{"id":121544,"date":"2021-09-18T01:30:00","date_gmt":"2021-09-18T08:30:00","guid":{"rendered":"https:\/\/www.brookstradingcourse.com\/?p=121544"},"modified":"2025-02-03T08:34:58","modified_gmt":"2025-02-03T16:34:58","slug":"gap-down-and-bull-breakout","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/pt-br\/live-trades\/gap-down-and-bull-breakout\/","title":{"rendered":"Live Trades Series: Trading Range Open, Gap Down, and Bull Breakout"},"content":{"rendered":"\n<div style=\"position:relative;padding-top:56.25%;\"><iframe src=\"https:\/\/iframe.mediadelivery.net\/embed\/156715\/b873d44c-0db3-4496-851e-2bacef0d563a?autoplay=false&#038;loop=false&#038;muted=false&#038;preload=true&#038;responsive=true\" loading=\"lazy\" style=\"border:0;position:absolute;top:0;height:100%;width:100%;\" allow=\"accelerometer;gyroscope;autoplay;encrypted-media;picture-in-picture;\" allowfullscreen=\"true\"><\/iframe><\/div>\n\n\n\n&nbsp;\n\n\n\n<p><em>Video duration 10min 29sec.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Trading Range open, gap down and bull breakout<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Video transcript<\/h3>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"225\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2021\/09\/Live-Trades-Series-1.png\" alt=\"\" class=\"wp-image-121698\" title=\"\"><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\">Introduction<\/h2>\n\n\n\n<p>I\u2019m Al Brooks, and I want to thank you for watching this video. This is part of my Live Trades series.<\/p>\n\n\n\n<p>Today, there\u2019s a gap down and then a Trading Range and then a bull breakout, and I want to talk about how I traded it today.<\/p>\n\n\n\n<div class=\"clear\"> <\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Live trade recording<\/h2>\n\n\n\n<p>I\u2019m going to speed up the bars up to the point that I place orders. This is also in a simulated account. I\u2019m also trading in my personal account as well. Here in the simulated account, I\u2019m trading just a single contract. You can see everything is moving very quickly. There\u2019s a big gap down where the market\u2019s far below the Moving Average, but there are several big bull bars, and traders don\u2019t want to sell too far below the average price if we\u2019re getting a lot of bull bars.<\/p>\n\n\n\n<p>We have a Lower Low Double Bottom here just above the Globex low. We have a reversal up. This is something of a Wedge bull flag, three legs \u2013 one, two, three. It would be reasonable to buy above this high or the Double Bottom, or above this high. This is a Wedge bull flag from this early bull trend right here, and it\u2019s a Higher Low <a href=\"https:\/\/www.brookstradingcourse.com\/price-action\/10-best-price-action-trading-patterns\/\" target=\"_blank\" data-type=\"post\" data-id=\"23907\" rel=\"noreferrer noopener\">Major Trend Reversal.<\/a><\/p>\n\n\n\n<p>We\u2019re breaking above the bear trend line here, but not closing above the Moving Average. And then here, we finally have a close above the Moving Average and above the high of the day, and it was confirmed by the follow-through bar. So now we have consecutive closes closing above the Moving Average and closing above the high of the day. That makes it likely that we\u2019re going to go up, and therefore I\u2019m going to buy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Trade entry limit order filled<\/h3>\n\n\n\n<p>I placed a limit order to buy 1 tick above the high of that bar, and I just got filled. We might test back down to this high or that high or this high. We may test to 50% pullback. But the odds are we\u2019re going to go higher, so I\u2019m going to hold long. And what\u2019s my goal? Well, we have a Trading Range and we have a bull breakout. The range is about half the size of an average day\u2019s range, and therefore I expect the average day\u2019s range to double.<\/p>\n\n\n\n<p>And the breakout is not all that strong. We\u2019re getting small bars and prominent tails, and therefore this is probably not going to lead to a bull trend for the remainder of the day. What\u2019s most likely is we\u2019ll go up for about a Measured Move and then enter another Trading Range, and therefore this rally is basically a bull leg in what will become a Trading Range. Another breakout bar. We closed on the high. We closed above the high of the prior bar.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Trade and stop management<\/h3>\n\n\n\n<p>Reasonable to hold long. You can always get out a point or two below any bull bar. You can get out a tick below a bear bar closing below its midpoint. I\u2019m going to put a stop in below the low of that bull bar because if this is going to go up the way it should, it should not pull back below that bull bar or breakout bar.<\/p>\n\n\n\n<p>I\u2019m slowing this down so you can see me adjusting the stop order. I\u2019m going to raise the stop. I can put it to a point or two below the low of the most recent bar, and we have that little bull bar. I could go below that a point or two, and that\u2019s just about my entry price. So I\u2019m going to raise that stop to right around my entry price \u2013 in this case, about a tick above my entry price. We\u2019ve had a bunch of bull bars with no bear bars, and there are two ways to draw the Measured Move, here and here.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Profit targets<\/h3>\n\n\n\n<p>So those are targets. They\u2019re about 10 points above my entry price, so there I placed a limit order to exit about 10 points above my entry price. I could\u2019ve held and I could\u2019ve gotten out a point or two below the low of the prior bar. For example, I could\u2019ve gotten out a point or two below that, or I could get out 1 tick below a bear bar closing on its low. This could go up all day, but this is yesterday\u2019s low; that\u2019s resistance. We have two ways to draw Measured Move targets here. That\u2019s resistance.<\/p>\n\n\n\n<p>And normally if you have a Trading Range that\u2019s about half of an average day\u2019s range and then a breakout, especially a breakout that is not especially strong \u2013 we have a lot of small bars and some bars with tails \u2013 this is probably going to convert into a Trading Range. And in a Trading Range, it\u2019s usually better to exit if you have a pretty good profit. Given the size of the bars and the size of the daily ranges, 10 points is a reasonable profit. So I bought here, I placed a limit order to get out 10 points higher, right here. It could go a lot higher, but it\u2019s probably going to end up in a Trading Range. So that\u2019s a reasonable place to exit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Trending Trading Range day<\/h3>\n\n\n\n<p>A trending Trading Range day. So it\u2019s a trend \u2013 we opened down here, we closed somewhere up here later in the day. So it\u2019s a bull trend, but it probably is going to be made of two Trading Ranges, a Trading Range here and then a breakout and then probably a Trading Range here. Obviously, if it becomes a very strong bull trend, I can always buy again. But right now, most likely we\u2019re going to <a href=\"https:\/\/www.brookstradingcourse.com\/how-to-trade-manual\/trading-ranges\/\" target=\"_blank\" rel=\"noreferrer noopener\">soon evolve into a Trading Range<\/a>.<\/p>\n\n\n\n<p>And this is the end of the day. And here\u2019s that opening Trading Range, here\u2019s the Moving Average. A big gap down, and then we started to get a lot of bull bars. Do you really want to be selling below the average price when you have a lot of bull bars? If you\u2019re going to be selling, you want things to be more bearish than average. You don\u2019t want things to be bullish. One measure of average is the Moving Average.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">4 concepts: TR open, then bull breakout<\/h2>\n\n\n\n<p>I want to make four points. We gapped down far below the Moving Average, and the average is a measure of the average price. It\u2019s fine to sell far below the average price if you\u2019re selling something that\u2019s far more bearish than average. But look at all the bull bars with big bodies closing on their highs. That is not very bearish, and therefore traders don\u2019t want to sell here. They\u2019re happy to sell, but not far below the average price.<\/p>\n\n\n\n<p>You could call this a Triangle; we have a Higher Low, another Higher Low. We have a Lower High, we have a Lower High, and this is a reversal up, and we have a slight Double Bottom Higher Low. It\u2019s also a Wedge bull flag, three legs down \u2013 one, two, and three. Bull bar not closing on its high, but still a decent bull bar. You could buy here, you could buy here, but it\u2019s right below the Moving Average. It could be a Double Top with this. It\u2019s better to wait for a breakout above the Moving Average. A breakout bar here. Not very big, has a conspicuous tail. You could buy above that.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Wait for follow through<\/h3>\n\n\n\n<p>Or you could wait for the follow-through bar, the close of this bar. You can see as soon as it closed, the open of this bar is slightly above the close of that bar. A lot of traders wait for a follow-through bull bar, consecutive closes above resistance, above the Moving Average, above the earlier high of the day, the top of the Trading Range. And then we had a third bull bar. I could\u2019ve bought here. I could\u2019ve bought above that. I could\u2019ve bought above this. Here we have a close above the Moving Average. I could\u2019ve bought the close there above that. Here we have a bull follow-through bar. I could buy the market on the close of that bar or above the high of that bar.<\/p>\n\n\n\n<p>I ended up buying above the high of this bar. At that point we had 6 consecutive bull bars. We probably are going to go up for about a Measured Move, and there\u2019s the Measured Move target. I exited with 10 points because the odds were the market was going to soon transition into a Trading Range. It went a little bit higher, but it basically was a Trading Range for the remainder of the day. If I had not exited here, I would\u2019ve exited below that bear bar.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Expect Trading Range to approximately double<\/h3>\n\n\n\n<p>The second point I want to make is that the early Trading Range on the open was about half the height of an average day\u2019s range. You\u2019d expect the day to have a range that would be about average, and therefore you\u2019d expect the range to double. It could double by going down; it could double by going up. It could double by going up a little, down a little. But chances are, once we\u2019ve had a breakout with follow-through, we\u2019re going to go for about a Measured Move up.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Wait for consecutive closes above EMA<\/h3>\n\n\n\n<p>I said you could\u2019ve bought here, you could\u2019ve bought here, here, here. The breakout and follow-through you could buy at any point in here. Waiting for consecutive closes above the Moving Average and above the lower Trading Range gives you an increased probability of making a profit, increased chance of the market going up for a Measured Move. But it also reduces your risk\/reward because buying here, there\u2019s less reward compared to buying here, and the risk is bigger. <\/p>\n\n\n\n<p>Theoretically, you might put a stop below this or below that, so you have worse risk\/reward. That\u2019s always the case whenever you do something to increase your probability. You cannot have both high probability and great risk\/reward. There has to be a reason for <a href=\"https:\/\/www.investopedia.com\/articles\/active-trading\/030515\/what-difference-between-institutional-traders-and-retail-traders.asp\" target=\"_blank\" rel=\"noreferrer noopener\">an institution to take the other side of the trade<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Taking profits<\/h3>\n\n\n\n<p>Finally, it\u2019s reasonable to take profits around the Measured Move. Traders often take profits at 4 points, 5 points, 10 points, 20 points. I did not think we would make 20 points, but I thought we had a good chance of making 10 because the Measured Move was a little bit higher. It\u2019s better to take profits once you\u2019ve had a reasonably good profit if you think the market\u2019s entering a Trading Range, because it\u2019s possible that this was going to be the high of the day, and we could\u2019ve traded down, and you would\u2019ve ended up giving back all of your profit. Here we have a reasonable profit. You\u2019re near a Measured Move based upon the lower range. It may go a little bit higher, but it\u2019s probably going to soon evolve into a Trading Range.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Close<\/h2>\n\n\n\n<p>I\u2019m Al Brooks, and I want to thank you for watching this video. I hope that you found it helpful.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Video duration 10min 29sec. Trading Range open, gap down and bull breakout Video transcript Introduction I\u2019m Al Brooks, and I want to thank you for watching this video. This is part of my Live Trades series. Today, there\u2019s a gap down and then a Trading Range and then a bull breakout, and I want [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":121696,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"shadow","_genesis_layout":"","footnotes":""},"categories":[1350],"tags":[1352,242,60],"class_list":{"0":"post-121544","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-live-trades","8":"tag-live-trades","9":"tag-price-action-trading","10":"tag-sp-emini","11":"entry","12":"override","13":"shadow"},"featured_image_src":"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2021\/09\/Live-Trades-Series-Featured-Image.png","author_info":{"display_name":"BTC Admin","author_link":"https:\/\/www.brookstradingcourse.com\/pt-br\/author\/richardhk\/"},"_links":{"self":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/121544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/comments?post=121544"}],"version-history":[{"count":0,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/121544\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/media\/121696"}],"wp:attachment":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/media?parent=121544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/categories?post=121544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/tags?post=121544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}