Higher low major trend reversal, broad bull channel

• Wednesday, January 16, 2013
• Bar 1 - Yesterday ended with buy climax so big pullback on open makes sense. Small bear bar, big tails, buyers below, sellers above. Pink line 146950 corresponds to about cash index high of last year = 5 year high
• Bar 4 - Bull outside bar surrounded by inside bars, room to moving average, probably ok scalp. Not strong candidate for low of the day. Might get rally to lower high major trend reversal and nested head and shoulders top for test down to gap of 3 weeks ago. Entire 2013 rally looks like trading range, not trend, so might test bottom
• Bar 7 - Follow through from bull breakout but only 2t body so not strong
• Bar 10 - Three inside bars in a row weak bull leg so probably trading range and possible final flag. An institution just breakout test or bought 10,000 calls so more up likely
• Bar 13 - Two bar revresal, final flag, wedge 1 7, but 10 bar bull microchannel so probably buyers below = buy or long pullback. Lower high major trend reversal but lp and better to wait for second entry sell. Trend from the first bar bull so should be buyers below 12
• Bar 18 - Bear breakout so should fail, failure and be buyers on close. Still trend from the first bar bull and always in long
• Bar 19 - H214, higher low major trend reversal, breakout test or bought 4, trend from the first bar bull, bull reversal bar, fail, failure breakout, ok buy or long. Bar a little big and in tight trading range so lower probability
• Bar 21 - 3 bars with close on high, more up. Might go for cash 5 year high = pink line above
• Bar 25 - Inside bar, one legged pullback in a bull move, ok buy or long but doji and bear bar so might get pullback. Wedge 1 12 but 5 bars up so wait for second entry sell. Two inside bars, big two legged pullback in a bear move 12, 17t fail, failure 4, but always in long
• Bar 27 - One legged pullback in a bull move but tight trading range and hoyrs so probably better to wait or use wide stop and trade small to allow for more pullback
• Bar 28 - Second entry sell but doji and tight trading range so lp. Wait. Bears can sell or short as second entry sell top of trading range but probably better to wait since not strong
• [more Bar-by-Bar Analysis, Daily Webinar and Trading Course info at www.brookspriceaction.com and www.brookstradingcourse.com]

About the Author

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.