1PB normally denotes the first pullback after a trend move of the day. The idea behind 1PB applies to all trends and that is the first pullback in a new trend is a high probability trade. So the first pullback after a trend break or trend reversal are kinds of 1PB since they all represent the first pullback in a trend.
When a 1st leg of the day is a strong trend move, there is some possibility that it may break below the low for a second leg. A strong reversal bar would make it an obvious reversal and you should not take a trade in the direction of the prior move. However, when the lower tail is small it could just be a trend bar pullback. An immediate continuation signal could be taken as a 1PB, if the signal is strong. If b5 had a bear close with a small or no lower tail, it would be a 1PB signal for another leg down. b5 however turned bullish at the last moment and turned out to be a poor 1PB signal that failed. b7 was obviously not a signal bar since an outside bar near the bottom of a range is a fade setup.
b5 to b8 make a 1PB since they constitute a 2 legged pullback after a reversal. However, b8 was too large to buy and its best to wait for the next signal. b18 was a gap bar and an A2 and represented two failed attempts to selloff from near the open and the first PB with a reasonable risk, therefore a de facto 1PB.
b34 was an A2 but it was the first pullback after an obvious trend breakout and is also worth taking.
No comments:
Post a Comment