📌 Review of February 18 Trades – BTC/USD
1️⃣ Trade #1 – Long at Previous Day Low Rejection & Bullish Wedge
📍 Context:
* The market was in a broad bear channel, making lower highs and lower lows.
* The price tested the previous day’s low and showed signs of rejection, forming a wedge bottom (a common reversal setup).
* The exponential moving average (EMA) was far above the price, suggesting a possible reversion to the mean.
📍 Two Reasons for Entry (Al Brooks Style):
1. Rejection at Previous Day’s Low:
* The price dipped below the previous day’s low but failed to break decisively, showing exhaustion.
* Large bear bars started shrinking, followed by small-bodied bars, signaling bearish momentum weakening.
2. Bullish Wedge Formation:
* The market formed three pushes down (a typical wedge reversal pattern).
* The final push had a strong bullish reversal bar, trapping late sellers.
📍 Execution:
* Entry: Buy at the wedge bottom after confirmation of a strong bullish bar.
* Stop-Loss: Below the wedge low.
* Target: The high of the day (HOD).
2️⃣ Trade #2 – Short at High of Day Stop Hunt & Bullish Wedge Failure
📍 Context:
* After the bounce from the previous day’s low, the market rallied into the high of the day.
* A break above the high of the day triggered stops, but there was no follow-through → Likely a stop hunt (a common bull trap).
* The bullish wedge breakout attempt failed, leading to a sharp sell-off.
📍 Two Reasons for Entry (Al Brooks Style):
1. Stop Hunt Above the High of the Day:
* The price broke above the high of the day but immediately reversed, trapping breakout buyers.
* Strong bearish bars followed, indicating heavy selling pressure.
2. Failure of Bullish Wedge Breakout:
* The bullish wedge formed higher lows, but the breakout failed.
* Instead of continuation, a large bearish bar closed below the wedge, signaling a downward breakout.
📍 Execution:
* Entry: Sell below the first strong bearish bar after rejection at the high of the day.
* Stop-Loss: Above the high of the day.
* Target: Exit based on price action—Microwedge formed, indicating potential exhaustion.
* Reason for Exit: After a strong drop, a series of overlapping small bars (microwedge) formed, signaling possible reversal or slowdown.
📌 Key Lessons from These Trades
✔ Al Brooks' "two reasons for entry" rule was effective:
* First trade: Rejection of the previous day’s low + Wedge Bottom → Long worked.
* Second trade: Stop Hunt at the high of the day + Wedge Failure → Short worked. ✔ Failed breakouts offer high reward-to-risk trades when confirmed. ✔ Micro Wedges often indicate exhaustion—good place to take partial or full profit. ✔ Always wait for price action confirmation before entering.
🚀 Both trades followed structured price action logic and resulted in strong moves.
1️⃣ Trade #1 – Long at Previous Day Low Rejection & Bullish Wedge
📍 Context:
* The market was in a broad bear channel, making lower highs and lower lows.
* The price tested the previous day’s low and showed signs of rejection, forming a wedge bottom (a common reversal setup).
* The exponential moving average (EMA) was far above the price, suggesting a possible reversion to the mean.
📍 Two Reasons for Entry (Al Brooks Style):
1. Rejection at Previous Day’s Low:
* The price dipped below the previous day’s low but failed to break decisively, showing exhaustion.
* Large bear bars started shrinking, followed by small-bodied bars, signaling bearish momentum weakening.
2. Bullish Wedge Formation:
* The market formed three pushes down (a typical wedge reversal pattern).
* The final push had a strong bullish reversal bar, trapping late sellers.
📍 Execution:
* Entry: Buy at the wedge bottom after confirmation of a strong bullish bar.
* Stop-Loss: Below the wedge low.
* Target: The high of the day (HOD).
2️⃣ Trade #2 – Short at High of Day Stop Hunt & Bullish Wedge Failure
📍 Context:
* After the bounce from the previous day’s low, the market rallied into the high of the day.
* A break above the high of the day triggered stops, but there was no follow-through → Likely a stop hunt (a common bull trap).
* The bullish wedge breakout attempt failed, leading to a sharp sell-off.
📍 Two Reasons for Entry (Al Brooks Style):
1. Stop Hunt Above the High of the Day:
* The price broke above the high of the day but immediately reversed, trapping breakout buyers.
* Strong bearish bars followed, indicating heavy selling pressure.
2. Failure of Bullish Wedge Breakout:
* The bullish wedge formed higher lows, but the breakout failed.
* Instead of continuation, a large bearish bar closed below the wedge, signaling a downward breakout.
📍 Execution:
* Entry: Sell below the first strong bearish bar after rejection at the high of the day.
* Stop-Loss: Above the high of the day.
* Target: Exit based on price action—Microwedge formed, indicating potential exhaustion.
* Reason for Exit: After a strong drop, a series of overlapping small bars (microwedge) formed, signaling possible reversal or slowdown.
📌 Key Lessons from These Trades
✔ Al Brooks' "two reasons for entry" rule was effective:
* First trade: Rejection of the previous day’s low + Wedge Bottom → Long worked.
* Second trade: Stop Hunt at the high of the day + Wedge Failure → Short worked. ✔ Failed breakouts offer high reward-to-risk trades when confirmed. ✔ Micro Wedges often indicate exhaustion—good place to take partial or full profit. ✔ Always wait for price action confirmation before entering.
🚀 Both trades followed structured price action logic and resulted in strong moves.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.