Thursday, January 5, 2012
A Higher Low after Bullish reversal is the best swing entry
A HL after a bullish reversal or a LH after a bearish reversal present the best swing entry of any move. This is because they represent the 1st pullback (1PB) of the new trend.
When a day opens with an obvious trend attempt (b3) off an obvious opening TR (b1,2) and immediately gives a reversal signal (b4) it is a possible 1Rev. Ideally, the reversal bar needs to be as large as the prior bar and dip more than 1t below it. b4 therefore was a rather weak bar. However, 1Revs often are weak signals.
The second signal at b7,8 dipped lower than b4 and therefore was not a good swing candidate. The fL2 at b17,18 therefore was the first HL and could be held for a swing.
Note that even at the 1Rev a TL break (b7-b12 broke TL b1,6) is desirable for a swing entry (Its an absolute essential for other reversals).