Monthly Archives: December 2012

Double Inside Bar Setup and Trigger

Here's a great email I received recently from YTC reader, Bijan:

Hi Lance,

I trade using YTC PAT 3min trading chart & 1min for triggers. I keep on coming across this 1min trigger over and over again (see charts below). I've never heard anyone discussing this type of trigger and wanted to get your thoughts on it's validity or not?

When the overall structure is in a setup area and you're looking for a trigger using the lower time frame is when I would use this trigger. The trigger is simply when the 1st bar is inside the prior bar and the prior bar is inside it's prior bar, that's when we would trigger above or below the 3rd bar (The charts below should clarify). On a micro time frame (much smaller than the 1min chart) this trigger would probably look like a tight range that were breaking out of.

Like I said, I see this often on a daily basis and it struck my curiosity……Thank you in advance for your input.

Bijan

double inside bar setup and trigger

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Counter-Trend Breakout Failure

I didn't trade this; I typically stop my session around 2am. But it's such a great example that I thought I should share it. (Yes… I get excited by price action!!! 🙂

Whatever you want to call this – turtle soup, pump fake, prairie dog pop – they're a great setup idea. (a) price extreme (b) retest (c) breakout (d) failure.

counter trend breakout failure

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Reader Email – A Breakthrough in Understanding Sentiment

The following email was received from a YTC Price Action Trader reader who has had a breakthrough in understanding how price movement (or failure to move) can influence trader sentiment. Well done!

The next step is being able to see this effect playing out across two timeframes, seeing how the shift in lower timeframe sentiment then impacts upon the decision making (and sentiment) of the participants on the higher timeframe. Larger and more sustained shifts require a change of sentiment across multiple timeframes, often cascading from the lower to the higher.

Here's an extract from the email (Titled: "Another breakthrough for me… sentiment"):

I understand now that markets are emotional !!!!!!! The movements, the decisions are based on human emotions!!!!!

What is happening on the charts, the PA gives certain information…eg. the level was false-broken once…ok nothing to worry yet..

but if it is false broken for the 2nd time…the emotions change…it's like ohhhhh!!!??? this change of emotion will produce a certain sentiment within market participants…and this sentiment spreads either quickly or slowly……and the sentiment on the chart is reflected by price/(price bars) moving slower/quicker or accelerating in a certain direction…

this recent PA made me realize it…finally 😉

(see below)

Best,

G

And here's the chart he referenced: (The size has been reduced to fit on the webpage. Click on the image to open a larger version in your browser!)

shift in market sentiment

Lance Beggs


Lower Timeframe Triggers into Trading Timeframe Setups

I'm a big fan of using a lower timeframe to trigger into setups identified on a higher trading timeframe. Typically that lower timeframe trigger will be based upon some kind of candlestick or micro-chart-pattern. The following was an email request I received from a trader who is developing his skills at the same concept.

Mr. Beggs,

Would you be so kind as to look at the attached charts and tell me if I'm more or less on the right track with going down to the lower timeframe chart to find the trigger? On the LHS is the trading timeframe chart of the SPY symbol, and on the RHS is the lower timeframe chart.

The following are the charts, with my comments added following each image. I've removed any reference to the actual timeframes used by this trader, as the concept applies to all trading timeframes with a lower timeframe chosen approximately 3-5 times smaller in scale.

Note: If you want to see my entry trigger education, it’s within this document: YTC Price Action Trader

Chart Sequence 1:

lower timeframe trigger entry into trading timeframe setup

Excellent. I'd call it a 123 Bottom rather than Double Bottom, but the result is exactly the same. Nice work!

Chart Sequence 2:

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