Need some help with reading the chart (Home work assignment)

[trader1969]

Hello,

With study of the charts I have 1 day (2000 Tick 05012019) I can’t figure out the chart reading process.
I try to figure out why the first marked trade is a high probability F2EL.

It is pre market, but we had a series of strong bull bars from the start of the day.
Followed by a small pullback not reaching the EMA and prices continue strong upwards with 6 strong bull bars.
So far the prices didn’t touch the EMA, so we have to see how prices react by next pullback at the EMA. The 2nd leg of the pullback have 4 strong bear bars but important to notice that the EMA was holding with a nice bull rejection bar closing on his high. This is also a test of the break out area. There is some weak follow thru upwards after the 4 strong bear bars, but the total context is what (If I understand the lectures tight) Always In with a Hard EMA. We get a strong Bull bar followed by an inside bear bar. Both above EMA.

I draw the upward channel from 1st 2 pivot points. The 2nd leg is much bigger and the reason why I drawn it this way.
But when the channel had a break and new high, the context was still strong bullish with only first touch at EMA. So possible EMA break and another test to the high is possible (If I understand the lectures correct). So at this moment I lack knowledge to understand this trade and I hope somebody can help me out filling in the pieces.

Thanks in advance

[eric-pal]

Good evening. Which homework assignment module and point of emphasis please?

There are a variety of aspects which are over viewed at different points within the lectures, and all applied against a years worth of charts. That knowledge will help to outline the particular characteristics of interest (and it builds so some aspects may not be present until later).

What you will find is that there are a variety of trades which are marked, and they fall within a variety of probabilities. Understanding context and bias first is important, and then structures, and finally specific bars. There will be some trades which may be marked and apparent when reviewing the live market vs the printed structure, although those are fewer.

Also, the predominance of the red and blue trades have higher probability, but not all of them. This one appears to be of that latter variety and you have called out some initial aspects. Please note though the 3 doji bars beforehand. This is indecision and is followed by an attempted breakout to the new high. However, and this is important, the follow through bar of the bull bar, what happened? Not only was there not any continuation, prices actually ticked downwards on bar open - a micro gap. It is a false breakout of the tight trading range with quick rejection. How many other bars on the chart show that type of gap and what would need to occur for that to happen ? Some initial quick rejection, independent of whether one takes the trade or not.

You may find that not every trade "speaks to you" as you work through the series. The ones that make the most sense, you will find both greater comfort, understanding, and repeatability because of familiarity.

Hopefully helpful and good trades to you! (please let me know if your specific aspect was not covered).