According to Al Brooks, what percentage of market openings result in a failed breakout and reversal?
Approximately 50%.
In a strong breakout, what is the minimum probability of at least a measured move higher?
At least 70%.
What is one common method for calculating the target for a measured move after a breakout?
Projecting the height of the breakout from the low of the first bar to the close of the last bar of the breakout.
After a strong breakout phase, the market typically enters a pullback, which often evolves into either a _____ or a _____.
trading range, channel
A bull channel often acts as a _____ flag, with approximately a 75% chance of an eventual bear breakout.
bear
What visual characteristic of price action, such as a series of doji bars, suggests a channel is evolving into a trading range?
The appearance of multiple bars with small bodies and significant overlap.
A strong bull breakout has about a 90% chance of leading to either a trading range or a continued trend, and only a 10% chance of what?
A major reversal from the high of the day.
A parabolic wedge top is a climax pattern characterized by _____ pushes up.
three
Following a parabolic wedge top, what is the most likely market behavior?
A reversal into a tight bear channel for 5-10 bars or more.
When two strong, consecutive bear bars appear at the open, closing near their lows with little overlap, what is the likely direction for the market?
The market is likely ‘Always-In Short’ and will probably trade lower.
What is a ‘moving average gap’ bar?
A bar whose high (in a downtrend) or low (in an uptrend) does not touch the moving average, indicating trend strength.
A Major Trend Reversal (MTR) setup involves a trend, a breakout of the trendline, and a test of the trend’s extreme, which forms a _____ or _____.
lower high (in a bull trend), higher low (in a bear trend)
In a triangle pattern, what is the probability of a bull breakout versus a bear breakout?
The probability is approximately 50/50 for a breakout in either direction.
A strong breakout bar that closes far above the high of the last 10-15 bars increases the probability of at least a _____ leg up.
second
What is a ‘High 2’ buy setup?
A pullback in an uptrend that makes two attempts to move down, creating a second entry opportunity to buy.
What is a ‘Low 2’ sell setup?
A pullback in a downtrend that makes two attempts to move up, creating a second entry opportunity to sell.
After a parabolic selloff, a strong reversal up often leads to a rally that has at least _____ legs up.
two
If a parabolic wedge top forms and the subsequent selloff moves sideways in a tight channel instead of down, what does this suggest?
It reduces the probability of a major reversal and increases the probability of a trading range followed by a trend resumption.
In swing trading, a trade initiated in the first hour of the day typically lasts for how long?
It can last from 30 minutes to several hours, often two to three hours.
What does Al Brooks mean when he says the market has ‘inertia’?
The market tends to continue the behavior it was exhibiting previously, such as continuing a trading range from the prior day into the current day.
In a trading range day, what is a common pattern of movement throughout the day?
The market often trends in one direction for two to three hours and then reverses to trend in the opposite direction.
A failed breakout from a narrow trading range has a 50% chance of reversing and a 50% chance of becoming a _____, leading to a measured move.
measuring gap
In a strong ‘Buy-the-Close’ bull trend, what is the most reliable entry strategy for traders who missed the initial breakout?
Buying at the close of subsequent strong bull bars.
In a very strong, sustained trend without pullbacks, where should a swing trader’s stop-loss initially be placed and held?
Below the low of the original signal bar that initiated the trend.
