Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader

by Al Brooks

Overview

The key to being a successful trader is finding a system that works and sticking with it. Author Al Brooks, a technical analysis contributor to Futures magazine and an independent trader for twenty-five years, has done just that. Over the course of his career, he's found a way to capture consistent profits regardless of market direction or economic climate. And now, with his new three-book series—which focuses on how to use price action to trade the markets—Brooks takes you step by step through the entire process.

In order to put his methodology in perspective, Brooks examined an essential array of price action basics and trends in the first book of this series, Trading Price Action Trends; provided important insights on trading ranges, breakouts, order management, and the mathematics of trading in the next book, Trading Price Action Trading Ranges; and now moves on to discuss trend reversals, day trading, daily charts, options, and the best setups for all time frames in this third, and final, book of the series, Trading Price Action Reversals.

Divided into four comprehensive parts, Trading Price Action Reversals skillfully addresses how to spot and profit from trend reversals—which offer an excellent risk-reward ratio—using the technical analysis of price action. Along the way, it touches on some of the most essential aspects of this approach as well as several other important topics, including:

• The various types of reversals, their specific characteristics, and how to select the proper ones
• Capturing profits by successfully trading the "first hour," or more accurately, the opening range of a day session
• Using price action to effectively incorporate options into your trading strategies
• Guidelines that can help keep traders on track and put them in a better position to make more informed trades and trade management decisions
• Specific price action setups that new traders should focus on
• And much more

Throughout the book, Brooks focuses primarily on 5 minute candle charts—all of which are created with TradeStation—to illustrate basic principles, but also discusses daily and weekly charts. And since he trades more than just E-mini S&P 500 futures, Brooks also details how price action can be used as the basis for trading stocks, forex, Treasury Note futures, and options. For your convenience, a companion website, which can be found at wiley.com/go/tradingreversals, contains all of the charts provided in the book.

Trading is a rewarding endeavor, but it's hard work and requires relentless discipline. To succeed, you have to stick to your rules and avoid emotion—and you have to patiently wait to take only the best trades. Trading Price Action Reversals, the final piece of this three-book set, will help you achieve this goal. With this guide, and the other two books in the series, you'll discover how to develop the patience and discipline to follow a sound system, and reap potentially huge financial rewards in the process.

Product Details

ISBN-13:	9781118172308
Publisher:	Wiley
Publication date:	12/27/2011
Series:	Wiley Trading , #520
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	576
File size:	7 MB

About the Author

AL BROOKS is a technical analysis contributor for Futures magazine and an independent day trader. His approach to reading price charts was devel-oped over two decades in which he changed careers from ophthalmology to trading. Brooks graduated from The University of Chicago Pritzker School of Medicine in 1978 and received a BS in mathematics with honors from Trinity College in 1974. His website, brookspriceaction.com, outlines his trading approach and views as well as hosts a subscription-based daily trading chat room in which Brooks talks with other traders about the market.

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Table of Contents

Acknowledgments xi

List of Terms Used in This Book xiii

Introduction 1

PART I Trend Reversals: A Trend Becoming an Opposite Trend 35

CHAPTER 1 Example of How to Trade a Reversal 73

CHAPTER 2 Signs of Strength in a Reversal 79

CHAPTER 3 Major Trend Reversal 83

CHAPTER 4 Climactic Reversals: A Spike Followed by a Spike in the Opposite Direction 111

CHAPTER 5 Wedges and Other Three-Push Reversal Patterns 151

CHAPTER 6 Expanding Triangles 181

CHAPTER 7 Final Flags 189

CHAPTER 8 Double Top and Bottom Pullbacks 217

CHAPTER 9 Failures 225

CHAPTER 10 Huge Volume Reversals on Daily Charts 257

PART II Day Trading 261

CHAPTER 11 Key Times of the Day 263

CHAPTER 12 Markets 271

CHAPTER 13 Time Frames and Chart Types 273

CHAPTER 14 Globex, Premarket, Postmarket, and Overnight Market 287

CHAPTER 15 Always In 293

CHAPTER 16 Extreme Scalping 317

PART III The First Hour (The Opening Range) 331

CHAPTER 17 Patterns Related to the Premarket 353

CHAPTER 18 Patterns Related to Yesterday: Breakouts, Breakout Pullbacks, and Failed Breakouts 357

CHAPTER 19 Opening Patterns and Reversals 373

CHAPTER 20 Gap Openings: Reversals and Continuations 395

PART IV Putting It All Together 401

CHAPTER 21 Detailed Day Trading Examples 403

CHAPTER 22 Daily, Weekly, and Monthly Charts 415

CHAPTER 23 Options 431

CHAPTER 24 The Best Trades: Putting It All Together 455

CHAPTER 25 Trading Guidelines 527

About the Author 541

About the Website 543

Index 545