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I have questions about the 2 buy signal bars that i cercled in green .
Why are they bad buys ? Aren't they 2nd or 3rd signal buys at the low of a TR?
This is a GREAT QUESTION and thank you for asking. One of the most important aspects of trading price action is understanding bias. Without incorporating this, oftentimes individuals find that "counting" doesn't work out so well. And this is because "counting" isn't an edge. Bias is.
This is also known as always in.
The 5 bear bars in a row. That is the 2nd time the initial spike, leading into the day, has been "filled". The bullish momentum from the beginning of the day has progressed through its cycle. and the 5 bear bars in a row do 2 things. First, it changes the always in direction and second, it drove prices down to the bottom of the trading range.
From the 5 bear bars, because of the strength in both number and time, a second leg is expected. Without good bullish bars, the bears have a slight edge. The bars which setup for the bulls were dojis. No strength, and the bears still maintained control.
Good exercise:
1. From the beginning of the day, note the change in the market cycle from trend -> TR -> trend
2. Note changes in strength and the AIL -> AIS
3. Note the series of dojis which do not make good bull signal bars despite the count.
4. Note the trades which are marked, both long and short, and the types of bars (mostly bull or bear bars, and not dojis).
Hopefully helpful and good trades to you!
