Good short entry?

I wouldn't short for these reasons:

1. Bear bar weak compared to all the bars before it

2. The weak bears who shorted on the big bear bar of the 2nd leg appear to be badly trapped. The high is not going to hold. Smart bears already took profits in the break of the low, hence no follow through. If the shorts took profits - expect high to be breached

3. Too many strong bull bars even in a bear context to short in the middle of the range

4. Strong BO from the big DB

5. Not exactly sure where the EMA is, but by a glance - it seems just around the close of the bear signal bar you're pointing to. Do you want to sell at average price when the bear price action is below average?

Hi Fabian!

At the time of the entry, this looked like a trading range. So, you were just trying to sell at the middle of a trading range, after 2 legs down. After 2 legs down and strong bull reversal (as you noted, tight bull channel) I would expect a 2nd bull leg up. So, I think that this bear bar is actually a long signal.  

But in case you do not want to take the long, at least avoid the short, specially because:

- The bull leg was tight, with a couple of good size bull bars, a micro gap open.

- Your short is betting in favour of a 3rd (arguably a 4th) bear leg into a trading range. In trading ranges, you fade 2nd and 3rd legs, you do not go in favour.

PD: The last bull bar on the chart is good to consider selling, since strong bull bars at the top third of a trading ranges is a sell signal. 

Thank you for your answers, in live trading i never fade strong legs regardless of context, but when i practice i try to implement some strong leg fade if i think that the context in favorable . Like Al says in the course , in trading range the odds are not as bad as they appear. So in what situation is it ok to fade a strong legs ? 

In theory, in trading ranges, you can buy or sell anywhere and make money IF you scale in into losing positions. 

However, in practice, this does not work unless you achieved the mastery level (high level of confidence and discipline). To become eligible to the mastery, you have to avoid such trading in any of the earlier levels (in earlier levels, this kind of trading is considered dumb trading).

What can you fade in trading ranges?: fade strong bull bars in 2nd legs (or 3rd legs) at the top third of a trading range, or fade strong bear bars in 2nd legs (or 3rd legs) at the bottom third of the trading range.

Attached the learning spiral for reference, extracted from this article: link. 

Josep