You have recognize the cycle. The market goes from range to trend to range to trend...etc. Trend starts with a BO (can be strong such as in a spike) or weaker but an obvious BO. Once it gets it’s first PB after the BO then it is in a channel. So the trend “part” of the cycle refers to a BO and a channel combined. Eventually the channel goes into a range which will Be confirmed when there are 20 bars of sideways movement. That range may last 10 more bars (once it has become an identified range) or 100 more bars but eventually a BO top or bottom of the range will happen....then a channel...then a range....SO ON and so on. Once the range reaches 40 bars or more chances are 50/50 the successful BO will be top or bottom.
Look to see what part of the cycle it has been in and you will know what is next. Once a trend (again composed of a BO and a channel) flattens out and goes 20 bars sideways then price is in a range. To tell where the market is presently at in terms of the cycle, look at where it was just previously at. That is why you need 20 bars, otherwise a sideways movement could just be a PB and the trend continues. IT NEEDS TO SHOW EVIDENCE IT HAS GONE FROM A CHANNEL TO A RANGE AS TRADING TACTICS AND SETUPS CHANGE FOR BO’S, CHANNELS, RANGES. THEY ARE TRADED DIFFERENTLY.
Price ALWAYS is in a channel ( on some time frame). Price always goes from sideways to up or down to sideways then back to up or down. Additionally, it is always in a trend and always in a range on one TF or another. So you can drill up or down to larger or smaller TF’s but in the end you are going to take your signals in the TF you are trading. I may look at 60, 30, 15 min TF’s to get a larger context view but if I am trading in a 5 min TF I want to know what the cycle is doing in that 5 min TF. See, it could be in a 2 or 3 bar PB on a 60 min TF but a range (20 or 40 bars sideways) on a 5 min. Since I am trading 5 min TF I thus trade it using TR tactics on the 5 min. Nevertheless, looking at a 60 min TF may be useful for helping me see if the trend was strong bullish on the 60 min then that 2 or 3 bars sideways to down is probably a Pb and the trend will continue thus giving a BO north in the 5 min TF when the BO does become successful on the 5 min chart.
Again Mr Brooks does a much more detailed job of explaining this stuff IF you are serious and can wade through his materials and learn the concepts he teaches. But be forewarned; it is a task. Not for the faint of heart nor for the “quick get me rich set up” many newbies are longing for.
My post #29 I hope is helpful in defining when price is in a range BECAUSE that is when the trend has ended for that particular TF. But you have to know when a sideways movement is a range and not just a PB. Hence, post #29 was a partial answer to the OP’s questions. Once price is in an established range what comes next? A BO! what is after a BO? A channel or another range ( stair stepping ranges one on top of the other..yes...it happens) but usually the BO is followed by a channel which is the latter part of the trend then that channel begins to flatten and morphs into a new range and in hind site it is usually clear that the latter part of the channel ends up forming the first part of the subsequent range.
Again speedo alluded to this “cycle stuff” and to studying Mr Brooks.
Last edited:
