A2 as a reversible trade

Today was a very clear trend from first bar, with the second bar giving an inside bar buy signal. Buyers above bar 1 could hold until a trendline break or trend channel line overshoot or other obvious trend termination signals.

The first sign came today at b19 ii possible final flag signal. However, it failed to trigger on b20 which led to a 2 legged breakout of the flag that terminated in a possible climax bar on b26 (large bar size with large volume after an extended run). This in turn gave another ii signal. This one did trigger and most longs would have gotten out by now.

Next we got a double top at b36 that did not trigger, followed by a double top pullback at b40. Many days when you have a trend from the first bar, various reversal signals will simply create a shallow pullback only to race up again. since we did not have a clear trendline break yet, none of these short signals are tradeable. The trendline broke decisively when the price dropped below b29 at b42. From this point, we had an H1 at b45 followed by a weak doji A2 signal bar at b50. On many strong trend days, the signal bars are terrible, so you need to take them anyway. Especially A2 as a continuation trade on a strong trend day is usually a good trade.

However, if the A2 fails, i.e, goes below the entry or signal bars, it often turns into an A2 short signal. Today the move from b42 low to b55 high was a 2 legged move that was a clear A2 short setup the moment it went above the high of b45. Until price fell below b50, the A2 long has not yet failed. Once it did fail at b57, failing the double bottom, its a clear short. The breakout pullback at b59 was the best entry for the shorts. b77 was another possible A2 and second entry short (same entry as b74, with strong b74 signal and b75 entry bars). Since this was near end of session, most traders would choose to exit their shorts rather than re-enter into new positions.

The breakout below the trading range should go to at least the size of the range. Today it did and despite a strong 3 point reaction at the measured move, it continued further down.

In summary, A2s are good trades to take since when they fail, they are usually reversible to the other side.