Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader

Praise for Trading Price Action Reversals

"Al Brooks has written a book every day trader should read. Onall levels, he has kept trading simple, straightforward, andapproachable. By teaching traders that there are no rules, justguide–lines, he has allowed basic common sense to once again rulehow real traders should approach themarket. This is a must–read forany trader that wants to learn his own path to success." NobleDraKoln, founder, SpeculatorAcademy.com, and author of Trade Like aPro and Winning the Trading Game

"A great trader once told me that success was a function offocused energy. This mantra is proven by Al Brooks, who left athriving ophthalmology practice to become a day trader. Al′sintense focus on daily price action has made him a successfultrader. A born educator, Al also is generous with his time,providing detailed explanations on how he views daily price actionand how other traders can implement his ideas with similar focusand dedication. Al′s book is no quick read, but an in–depth roadmap on how he trades today′s volatile markets, complete withdetailed strategies, real–life examples, and hard–knocksadvice." Ginger Szala, Publisher and Editorial Director,Futures magazine

Over the course of his career, author Al Brooks, a technicalanalysis contributor to Futures magazine and an independent traderfor more than twenty–five years, has found a way to captureconsistent profits regardless of market direction or economicclimate. And now, with his new three–book series which focuseson how to use price action to trade the markets Brooks takesyou step by step through the entire process.

In order to put his methodology in perspective, Brooks examinedan essential array of price action basics and trends in the firstbook of this series, Trading Price Action TRENDS; providedimportant insights on trading ranges, breakouts, order management,and the mathematics of trading in the next book, Trading PriceAction TRADING RANGES; and now moves on to discuss trend reversals,day trading, daily charts, options, and the best setups for alltime frames in this third, and final, book of the series, TradingPrice Action REVERSALS.

Page by page, Brooks skillfully addresses how to spot and profitfrom trend reversals which offer an excellent risk–rewardratio using the technical analysis of price action. Along theway, he touches on some of the most essential aspects of thisapproach as well as several other important topics, including thevarious types of reversals, successfully trading the opening rangeof a day session, price action setups that new traders should focuson, and much more. Throughout the book, Brooks focuses primarily on5 minute candle charts all of which are created withTradeStation to illustrate basic principles, but alsodiscusses daily and weekly charts. And since he trades more thanjust E–mini S&P 500 futures, Brooks also details how priceaction can be used as the basis for trading stocks, forex, TreasuryNote futures, and options.

List of Terms Used in This Book xiii

Introduction 1

PART I Trend Reversals: A Trend Becoming an Opposite Trend35

CHAPTER 1 Example of How to Trade a Reversal 73

CHAPTER 2 Signs of Strength in a Reversal 79

CHAPTER 3 Major Trend Reversal 83

CHAPTER 4 Climactic Reversals: A Spike Followed by a Spike inthe Opposite Direction 111

CHAPTER 5 Wedges and Other Three–Push Reversal Patterns 151

CHAPTER 6 Expanding Triangles 181

CHAPTER 7 Final Flags 189

CHAPTER 8 Double Top and Bottom Pullbacks 217

CHAPTER 9 Failures 225

CHAPTER 10 Huge Volume Reversals on Daily Charts 257

PART II Day Trading 261

CHAPTER 11 Key Times of the Day 263

CHAPTER 12 Markets 271

CHAPTER 13 Time Frames and Chart Types 273

CHAPTER 14 Globex, Premarket, Postmarket, and Overnight Market287

CHAPTER 15 Always In 293

CHAPTER 16 Extreme Scalping 317

PART III The First Hour (The Opening Range) 331

CHAPTER 17 Patterns Related to the Premarket 353

CHAPTER 18 Patterns Related to Yesterday: Breakouts, BreakoutPullbacks, and Failed Breakouts 357

CHAPTER 19 Opening Patterns and Reversals 373

CHAPTER 20 Gap Openings: Reversals and Continuations 395

PART IV Putting It All Together 401

CHAPTER 21 Detailed Day Trading Examples 403

CHAPTER 22 Daily, Weekly, and Monthly Charts 415

CHAPTER 23 Options 431

CHAPTER 24 The Best Trades: Putting It All Together 455

CHAPTER 25 Trading Guidelines 527

About the Author 541

About the Website 543

Index 545

AL BROOKS is a technical analysis contributor for Futures magazine and an independent day trader. His approach to reading price charts was devel–oped over two decades in which he changed careers from ophthalmology to trading. Brooks graduated from The University of Chicago Pritzker School of Medicine in 1978 and received a BS in mathematics with honors from Trinity College in 1974. His website, brookspriceaction.com, outlines his trading approach and views as well as hosts a subscription–based daily trading chat room in which Brooks talks with other traders about the market.