Price action analysis hinges on key levels in stock indexes

Strong bull reversal but sellers above

Stock index, chart, technical analysis Stock index, chart, technical analysis

pending chart 1385

Sell vacuum, final flag bottom, bull breakout of lower trading range, failed bull breakout above upper trading range and then large final flag top

  • Thursday, May 31, 2012
  • Bar 1 - Yesterday = trading range day. Bull bar but middle of trading range and below moving average. Don�t buy. Bull breakout of bear microchannel so should test down to low of yesterday.
  • Bar 2 - Big outside down bar, near low of yesterday. Not high enough probability for short scalp. Possible high of the day so ok swing, but low probability
  • Bar 3 - Another big bear bar so always in short and short closes market
  • Bar 4 - More down
  • Bar 5 - Tail so maybe 1-2 more down before trading range
  • Bar 6 - Strong bull reversal bar but sellers above after strong bear spike, and probably sellers below but should enter trading range soon. Might go sideways for hours and then decide between trend resumption and reversal late in day
  • Bar 9 - Reversal bar but bear body. Should go up enough for scalp since market should enter trading range and bars are big.
  • Bar 10 - Good entry bar, but still always in short unless get consecutive strong bull bars or major trend reversal after test of moving average. Probably sideways to up for hours
  • Bar 11 - Bear inside bar, breakout pullback short, double top 7, but trading range likely so probably buyers below
  • Bar 14 - Double top 7, but tail and strong bull bars so scalp better or wait
  • Bar 16 - Bear breakout, more down. Lower low major trend reversal on smaller time frame, but 4 bars down so sellers above
  • [more Bar-by-Bar Analysis in the Forums at www.brookspriceaction.com]
About the Author
Al Brooks

Al Brooks, M.D., is author of the Brooks Trading Course (27 hours of videos at BrooksTradingCourse.com), several books on Price action (Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader, Wiley, 2009, and the 500,000 word, three-book series, Trading Price Action, Wiley, 2012), and numerous articles in Futures Magazine. He also provides live intraday E-mini price action analysis and free end-of-day analysis on www.brookspriceaction.com.

Originally published on BPA Forums. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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