Be sure to check out the webinar along with this post to see in depth chart examples of what these reversals look like. Bear Flag. This indicator finds the following Strat Combos: The Pivot Machine Gun (PMG) labels any 5 or more consecutive candles that make higher lows or 5 or more consecutive candles that make lower highs. My friend Trish in Woodstock IL has 3 puppies for sale! A stock opens and GAPS up or down and there is no fill in between. In early April, my trading account was around $350. A broadening formation is a pattern where ranges continue to expand on both sides, thus an outside bar is a broadening formation when you shorten the time frame of the chart. hint. In fact, elections happen to be a big factor in the formation of a megaphone stock pattern. Broadening Formation. Candle sticks have 5 basic parts. TheSTRAT is a form of charting method where one should analyze multiple timeframes. Using Benzinga Pro to create your watchlists to identify Scenario 2s can make identifying these patterns easier. Inconsistencies regarding the effect of multicultural and transient experiences on well-being exist in the psychological literature. Image by Sabrina Jiang Investopedia2021. Our forum can be intimidating, if not overwhelming. These broadening formations are heavily used with "The Strat" and can add confluence when looking for reversals within higher timeframe points of interest. What specific condition do you want an alert for? 259 9.4K views 1 year ago In this video you will learn how to draw a broadening formation. check daily chart. Upward breakouts did best in the 2000s but worst in the 2010s. Directional bars and outside bars that fit into a triangle and ultimately lead to reversals or expansions and present trading opportunities, Little to no top wick, open and close are very close to the top of the wick, 75% of the candle is mostly wick at the bottom, Entry as soon as the next candle breaks above the top, or top, wick of the previous hammer candle, Candle that looks like a "shooter" / upside down hammer, Little to no bottom wick, open and close are very close to the bottom of the wick, 75% of the candle is mostly wick at the top, Entry as soon as the next candle breaks below the bottom, or bottom wick, of the previous shooter candle, After price is done consolidating it will break up or down, take the break at the top or the bottom of the previous inside candle depending on which way it goes, A very fast moving upwards or downwards candles taking out previous highs or previous lows, As the prior candles are "taken out" it causes those investors to go the other way, reinforcing the direction of the bar even more taking out even more highs or lows, As consolidation is happening, things will get "tighter" toward a point and eventually break out up or down and go fast, My personal script for free - actionable signals, colors, strategies, work in progress. For example, a swing trader may identify abroadening formation and enter long positions when the price hits a lower trendline and/or short positions when the price hits an upper trendline. I will never see another chart again without seeing #TheStrat. Candle sticks have 5 basic parts. What Is a Broadening Formation? Just wanted you to know I wasn't ignoring you buddy! Hey, check out the top post again my friend. Remember, as I mentioned originally, this is just the first draft (well, second now, really). Tell me how to fix it, or at the very least, tell me where exactly you think I'm wrong. Likewise, the outside bar is where the subsequent bar's high and low both exceed the prior bar. Starting your free trial is easy, all you have to do is sign-up here. Let me know ask for collaborator request. The cookies is used to store the user consent for the cookies in the category "Necessary". TheSTRAT is a form of charting method where one should analyze multiple timeframes. Shoutout to @RobInTheBlack. Some of the main actionable signals Jermaine points out are: Actionable signals are important because they tell us why the price is moving. If you break out the mechanics of The Strat, the whole goal is to determine the aggressiveness of buyers versus sellers. He's been engaged in the markets since the young age of 15. You can see this below in the video. Bearish PMG Break. Usually in the afternoon I'll scan my list of stocks for daily, weekly 1s, 3s, and 3.1s (Rob calls a 312 a "Chicago" bc that's the area code there) and add them to a watchlist. According to Rob Smith's guest post for Steve Burns: Plus four timeframes, varying depending on trade style And whatever else Haven't had a chance to fully absorb Rob Smiths strategy yet as I keep getting interrupted Could you share your latest script, please? The Broadening Top pattern forms when the price progressively makes higher highs (1, 3) and lower lows (2, 4) following two widening trend lines. Downward breakouts have a big break even failure rate which may disqualify them from your trading tools. The chart below shows an example of a classic broadening formation. Missed the smaller scale one which perfectly tagged the recent low but i've done some more studying and almost completed the strat course, so my eye is sharpening every day. In this episode of How To Trade It, Casey talks candidly with Rob about the Broadening Formation and his In addition, VIP members get access to over 50 VIP-only custom indicators, add-ons, and strategies, private VIP-only forums, private Discord channel to discuss trades and strategies in real-time, customer support, trade alerts, and much more. It does not store any personal data. The broadening top pattern, also known as the megaphone pattern, is a bullish reversal pattern. He also offers a course on getting started with The STRAT, and numerous videos offering daily insight into the market. You signed in with another tab or window. qqq 2d spy 3 This signaled to me that I should be looking for shorts in my day trading, but the market opened back near all-time highs. These formations are relatively rare during normal market conditions over the long term,since most markets tend to trend in one direction or another over time. Broadening is a type of semantic change by which the meaning of a word becomes broader or more inclusive than its earlier meaning. Right back at you! Swing traders can capitalize on the oscillations contained within a broadening formation. Today's a Monday, so the week does not really count, but the month still looks strong with a hammer counter shooter, and the daily chart shows a potential 2d, Momo Counter Shooter. Traders and investors who visit us every month, Top website in the world when it comes to all things investing, From 1M+ reviews. I wasn't going to release it yet because I'm waiting to really make it work with multi bar pivots, but someone asked for exactly this in the comments and since this one is ready now, here you go. This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register. Robs Live Room, where he follows the market every weekday, is a mainstay of Sepia Groups programming. For more information on The Strat, see these articles: For more detailed information on Pivot Machine Guns, see Saras PMG video. With a "hands-off" approach, Trade Unafraid intelligently navigates the bid-ask spread and gives users the power to place "conflicting orders." By fully automating trade entries and exits while still allowing you to manually override anything, Trade Unafraid compels user discipline and adherence to strategies. Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. An ascending triangle is a chart pattern used in technical analysis created by a horizontal and rising trendline. Major conclusion of the trading method is based on time frame continuity. If you are new, or just looking for guidance, here are some helpful links to get you started. And Im sure it has been a good learning experience. Bearish PMG. In conventional seismic Benzinga Pro will never tell you whether to buy or sell a stock. With a small account, its important to get out when profits arent going to happen and to grab at the opportunity when profit presents itself. Descending Triangle. It's always more enjoyable to post your winners, but I have learned that small losses are much more essential than any size winner. Preferably we want the reversal to happen at the beginning of the week. In this episode of How To Trade It, Casey talks candidly with Rob about the Broadening Formation and his famous creation, The Strat. He operates a trading room at Sepia Group. Hammers are necessary because they indicate when to take immediate entry. The pattern is considered a continuation pattern, with the breakout from the pattern typically occurring in the direction of the overall trend. Unpacking the Broadening Formation with Expert Guest, Rob Smith, Ep #107. To draw the lines of the triangle or broadening formation simply go off old highs and lows. A few minutes after I got it, with a 3 (Broadening formation and price discovery), 2d, and then a 1. This indicator can be demoed and added to your TradingView charts using this link. When Jermaine creates his watchlist, he automatically sets up the monthly chart and looks for anything that is on a Scenario 2 for that month. Here is the analysis: As always, I zoom out to see the story of the higher time frames to determine bias. However, Jermaine states he commonly watches more closely to them on the 60 minutes. This script displays the following: The Strat candle numbers (1's, 2's, & 3's) The Strat Combo labels along with trigger line Pivot Machine Gun ( PMG ) dynamic labels Hammer & Shooter candle labels One of the main strategies Jermaine points out about trading on the Strat is that theres no need to use indicators. Broadening Formations Written by HTMW Team The right-angled and ascending broadening chart pattern is not one you might choose to trade. You and only you are responsible for the decisions you make trading. Conclude direction of the current trend by looking at the direction of the higher time frame candles. Outside bar represents a reason for future and immediate time frame broadening formation of price behavior. It is characterized by increasing price volatility and diagrammed as two diverging trend lines, one rising and one falling. I have about enough knowledge and common sense to be able to write this indicator using only the basic definitions of the three (six actually) types of scenarios and the four basic reversals, but I still don't have the full ideology under my belt. However, they are good news for swing traders and day traders, whoattempt to profit from volatility rather than relying on directional movements in a market. Learn all about VIP membership, To access the premium indicators, which are plug and play ready, sign up for VIP membership. The Strat is a price action based trading method created by Rob Smith. This will define the direction of the trade I'm expecting to make for the day. Cheers to the author! Optimization of a set of 31 items based on expert reviews of the initial pool of items (the authors evalu- Many Git commands accept both tag and branch names, so creating this branch may cause unexpected behavior. Any news, opinions, chats, messages, news, research, analyses, prices, or other information contained on this Website are provided as general market information for educational and entertainment purposes only, and do not constitute investment advice. The broadening pattern is often used by traders who trade technical analysis. No one can ever exhaust every resource provided on our site. It was the first day I ran a live trade of the still-to-be-named trading platform we are close to releasing. With a hands-off approach, Trade Unafraid intelligently navigates the bid-ask spread and gives users the power to place conflicting orders. By fully automating trade entries and exits while still allowing you to manually override anything, Trade Unafraid compels user discipline and adherence to strategies. Inside bar represents pause in the current trend. That being said Bro! Within this disk, smaller clumps of gas and dust began to form, eventually becoming . Broadening formations occur when a market is experiencing heightened disagreement among investors over the appropriate price of a security over a short period of time. Dont set your stops way above the shooter or way below the hammer. Different polling results or candidate policies may cause a market to become very bullish at some pointsand very bearish at other points. Investopedia does not include all offers available in the marketplace. This cookie is set by GDPR Cookie Consent plugin. I posted something similar last week, but I thought it was worth sharing this again. Another great way to ensure small losses when option trading is to avoid options where the spread collapses beneath you. Other chart patterns perform much better. You must never use a new system or indicator or study or strategy to trade with live money until you've had the chance to really learn it inside out and have had ample opportunity to practice with paper money, and have made sure that it works, and it's right for you. 1. Broadening Top formation appears much more frequently at tops than at bottoms. I have made all the changes in the code and logic be reflected in edits to my previous posts. Aug 23. It must be because by definition the range is expanding on both sides, Here's Google on a 30 minute chart over the past few days and it's corresponding outside bar on . The biggest takeaway from these reversal patterns is that Strat reversals work on any time frame. There are NO, ZERO, buy or sell signals in my indicators. I set a first target of a quick 0.10 and then let the second call run with three different exit tactics in place. And 3s go outside both sides of the previous candle. Bottom line. Please checkout. Cassie taken by Me! We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. This was the tsla chart about half an hour after the open. The Strat Combo labels (which are made of the 1s, 2s, 3s outlined above) display labels when a Strat Combo occurs. In addition to looking at trendlines, these traders may look toward momentum indicators to identify the likelihood of a short-term reversal. Please verify your age. Also, all of the colors used in this script can be changed from the inputs section, so a user can easily change colors to match their current color scheme. Rob Smith is the originator of The STRAT trading method. This is to ensure that you can exit quickly. Strat traders trade on what he describes as three universal truths. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Jermaine says that having all your charts set-up (starting from bottom right corner, going counterclockwise) by monthly, weekly, daily, and 60. Thats how the trends are initiated and continued on till they reverse! It is identified on a chart by a series of higher pivot highs and lower pivot lows. At the same egy in 2019. The resistance (upper) line is formed by 2 or more ascending peaks. If you need professional investment advice, please consult a registered investment adviser. Now look at the result: When I trade, I have an automated 1-min candle trail to exit on a break of the low of the previous candle (basically looking for a 2d). Bullish PMG Break. I'm a visual learner. Terms in this set (12) What is The Strat & Why is it beneficial? I do intend to dive all the way into it and squeeze as much benefit as I can out of it, so I think there will be more indicators and studies on the way, but I also don't want to make the rookie mistake I made before and put out a study that is wrong, so it may be a little while. Want to contribute? Over all, this fits in with the lucid-trend methodology of ripple effects created by the water drops. Manage Settings The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". Gravity caused the nebula to contract and spin faster, forming a disk-shaped structure with a central protostar that eventually became our Sun. Introduction In order to resolve thin beds in seismic data, the frequency bandwidth should be broadened [1]. We and our partners use cookies to Store and/or access information on a device. Simple fix is to remove your "=" references in the code. useThinkScript is the #1 community of stock market investors using indicators and other tools to power their trading strategies. Trade Unafraid allows you to automate things like: if the stock triggers a 1-min candle high, find me the best option that would result in a qty of 5 with a spread less than 5%. Benzinga Pro is a financial news and research platform developed in and delivered from Benzingas headquarters in Detroit, Michigan. We and our partners use data for Personalised ads and content, ad and content measurement, audience insights and product development. Shoutout to @RobInTheBlack. Globalization has resulted in an exponential increase in the number of Third Culture Kids (TCKs), defined as being raised in a culture other than that of their parents (or the passport country) and meaningfully interacting with different cultures. Identifying reversals such as 2-1-2 on the downside that forms a shooter can turn the rest of your time frames red, if it continues. Even if its small. Broadening Formations, Right-Angled and Ascending: Time Performance The above table shows the performance of right-angled ascending broadening top chart patterns in bull markets over the last three decades. Be specific. For a better experience, please enable JavaScript in your browser before proceeding. This creates a series of higher interim peaks in price and lower interim lows. The price may reflect the random disagreement between investors, or it may reflect a more fundamental factor. After a big loss in options trading, he decided to take a break and do some research on ways to better his trading game. Before beginning you have to have a basic understanding of candlesticks. It usually occurs after a significant rise, or fall, in the action of security prices. Remember that the 60 is always in control because it tells you whats happening in that moment. The Strat eliminates guessing, bias, market noise, and focuses on aspects that we can define, quantify, analyze and execute on. When looking at actionable signals there are hammers, shooters, and reversals to take into consideration. The distance between the shape and the candles can be manually adjusted in the inputs section. Our forum can be intimidating, if not overwhelming. However, this trade was not meant to be. Conclude support and resistance level based on the higher time frames appreciation or rejection levels. You can find our full disclaimer located here. If you would like to change your settings or withdraw consent at any time, the link to do so is in our privacy policy accessible from our home page.. A high score in the Maturi- scores speak to its track record of a dedicated ty dimension points to the presence of later-stage and coordinated effort to implement AI in govern-tech companies able to provide off-the-shelf prod- ment since the publication of its National AI Strat-ucts for governments to purchase. This is telling me that the aggression has shifted back to the buyers. A broadening formation is a price chart pattern identified by technical analysts. Meaning, the stock price takes out previous higher highs and previous lower lows. The script also identifies if the candle type is a Hammer, Inverted Hammer, Shooting Star, or Hanging Man. It could be the culprit behind major reversal. Here to learn! And here you get a classic actionable signal, a 3-2d-1-2u. This is going to sound like I'm coming down on you or being condescending, but I ask that you please do not take it that way. @_JamesBradley__ whose approach to trading has made a tremendous impact on how I trade. See More. But opting out of some of these cookies may affect your browsing experience. Its when they close and become actionable that make them universal truths. This is a great way to use The Strat to naturally build tight stops into your trading. Meaning, the. Trade Unafraid evaluates personalized criteria and selects the most favorable option, allowing traders to come out on top. The new v iew in psychology assumes that learning is Some patterns suggest continuation in the direction of the previous trend. This was followed up by yesterdays "3" on the SPY, as well as a "2down" for the QQQ's. Results (note I made another smaller trade resulting in a $2 gain, nothing noteworthy though): I am only bringing this up because someone else that read my posts brought it up to me. You don't want to miss it! STRAT PART 1 - Candles and Pricing Action, https://www.youtube.com/user/smithsintheblack, https://www.youtube.com/channel/UCYllJ4eRU4wDVSbZ9pHIJKA, https://www.cnbc.com/2021/06/18/stocks-making-the-biggest-moves-in-the-premarket-adobe-smith-wesson-orphazyme-more.html?&qsearchterm=premarket, https://www.federalreserve.gov/newsevents/calendar.htm, https://research.investors.com/economic-calendar/, https://www.earningswhispers.com/calendar, https://www.marketwatch.com/tools/upgrades-downgrades, https://www.marketwatch.com/tools/screener/short-interest, https://usethinkscript.com/threads/rob-smiths-the-strat-indicator-for-thinkorswim.3312/, https://www.tradingview.com/script/PWJRC2Nt-Strat-Assistant/, https://www.tradingview.com/script/0WOo54ab-Candle-Type-The-Strat/, https://www.tradingview.com/script/idDydr1G-TheStratHelper/, https://www.tradingview.com/script/9QtwuoHf-Timeframe-Continuity/, https://www.newtraderu.com/2019/02/13/what-do-we-know-to-be-true-about-price-action/, https://drive.google.com/file/d/1-P-ADhAwqg30pzVSdqzJfprUks02eTu6/view, https://drive.google.com/drive/folders/1eIpH0RyJCGCQvhHZ8miP-DaGwU9bWqLb, https://www.marketgauge.com/TradingThe10OclockBulls.pdf, https://www.interactivebrokers.com/en/home.php, Stock trading after the market closes 4PM EST, indicator to measure the volatility by percentage of a stock with price being neutral, Volatility indicator - a wedge or triangle shape of the recent candles, A compound 3 bar - higher highs - lower lows - subjectively drawn, Usually a term used for when earnings come out in the AM before the market opens, Trending down on the magic broadening formation trendline, type of moving average that places a greater weight and significance on the most recent data points, A company's earnings per share outstanding, Reached magnitude or price target or right at broadening formation line, Trading that occures after the market close 4PM, All time frames "match" - they are all up or down. What Is A Broadening Formation? Scribd is the world's largest social reading and publishing site. You should always understand that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. This is one of the most important concepts when trading on The Strat. Once again, you always have to start out with the larger timeframes and see who is most likely to be in control. Today was a big day. He stumbled upon all the forex trader influencers on Instagram which led him to reading an article by Rob Smith titled What Do We Know to be True About Price Action. From there he began using Rob Smith as his guide to trading, following him on all his social media platforms and learning from him. This week, the $QQQ ETF closed at $309.38 (-1.24%), and much like the $SPY, went outside (3) for the week. Broadening formations indicate increasing price volatility. Learning how to trade on The Strat all comes with practice. Traders of all kinds utilize chart patterns in order to identify both the current trend of a market and, also, where price could be headed next. Sometimes that doesn't happen. How to Use Benzinga Pro to get Stock Market News, Beginners Guide to the Pattern Day Trading Rule, Beginners Guide: What to Know About Day Trading. These candle types are highly likely reversal points in price action. This commit does not belong to any branch on this repository, and may belong to a fork outside of the repository. This cookie is set by GDPR Cookie Consent plugin. How the pattern performed in the past provides insights when the pattern appears again. Trend analysis is a technique used in technical analysis that attempts to predict future stock price movements based on recently observed trend data. Realizing that he wanted to make bigger gains, he decided to get into options trading. Its good to set strict stop limits on yourself. Cant wait to see the finished product. The numbers are made as follows: Number 1 in green and below the price is an inside bullish bar. Talc Lawsuits Keeping Lid on Johnson & Johnson (JNJ), Trend Trading: Definition and How Strategy Aims For Profit, Trend: Definition, Types, Examples, and Uses in Trading, Descending Triangle: What It Is, What It Indicates, Examples, Understanding Trend Analysis and Trend Trading Strategies, The Ascending Triangle Pattern: What It Is, How To Trade It. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. JavaScript is disabled. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Additional Strat Info (newly added material to course) Broadening Formation What timeframes and Why (promised I'd add this back on 8/18) (67:24) Broadening Formations and New Script that is Helpful (17:15) Better way to backtest for multi chart backtest (11:29) She is a library professional, transcriptionist, editor, and fact-checker. Ill send you my feedback afterwards. Additionally, on Benzinga Pro, you can easily have all your charts set up as recommended by Jermaine. We know what could happen by price, actionable signals, and the broadening formation, but we don't know when. Megaphone patterns begin to form when the market begins to have a higher risk over a longer period of time. Using quantitative analysis that breaks down price action by timeframe continuity, actionable signals, and price discovery broadening formations, The STRAT has been shown to amplify trading results for both short and long-term traders. Lastly, broadening formations are important when trying to identify larger outside bars with higher highs and lower lows. Determining the trend direction is important for maximizing the potential success of a trade. Directional bar which are known as type 2 bar Outside bar which is known as type 3 bar Understanding and recognizing patterns to identify different reversals can set you up for success in this line of trade. With small accounts, you dont hold losers. The cookie is used to store the user consent for the cookies in the category "Analytics". After adding these to his watchlist he looks for actionable signals on a weekly to confirm whats happening on a monthly. It focuses on what is shown to be true by using multiple timeframe for quantitative analysis following the aggregation of price over time, divided among different participation groups, in the form of candlestick price charts. Having said that, one should look out for how and where it closes in the major timeframe and how the shorter or immediate time frame trend is adapting the price action. Patterns vs. Trends: What's the Difference? Rob Smith is a trading mentor and the Director of Research and Trading Operations for Smith's In The Black LLC at www.SepiaGroup.com. I had a solid start, and I have decided to share my trading here. Are you sure you want to create this branch? Day traders tend to see these patterns more often as well since they are focused on shorter time frames lasting minutes or hours. A trend is the general price direction of a market or asset. The charting method has three major elements; Major direction, candle analysis and conclusion of price direction. The widening of these two trendlines meansthe potential profit for each swing trade is greater than the swing before. When a candle breaks through the hammer candle you know that a reversal is present and there is a good potential to entry. This compensation may impact how and where listings appear. Once you become more experienced you can start identifying them on smaller time frames. Strat Setups Bullish PMG. The article is devoted to the problem of the choice of approaches to developing the text formation competence of future navigators. Larger scale triangle still has lower edge to tag, as previously mentioned it aligns with yearly. Over the last few weeks, I have been practicing The Strat, and I found my way to Jim Bradley. We get it. 2s take out only one side of the previous candle. The offers that appear in this table are from partnerships from which Investopedia receives compensation. He has concluded his trading method after participation in the market for more than 20 years. Bear Wedge. The STRAT method, developed by Rob Smith, is a price action-based charting strategy that analyzes individual candles and how they relate to each other, how they conform to levels of support and resistance, and how they can be traded with other time frames. Okay, I've changed the logic and added a pivot_high, pivot_low component for the 3-1-2. The Three Universal Truths to Trade on While Strat Trading: Jermaine says that the three things known to be true while. We aimed to . Opinions, market data, recommendations or any other content is subject to change at any time without notice. Hammer that counters/turns into a shooter, Whole day is inside candle from prior day, Whole week is inside candle from prior week, How far a price run is or the price target, Company or an individual that quotes both a buy and a sell price hoping to make a profit on the bidask spread, Rob Smith saying look for the GAP on these it might fill, when a price breaks above or below the previous candle high or low from the open used on 15, 30, or 60 mins from open, the high price of a stock from the opening range 15/40/60 mins from open breaking to the upside, the low price of a stock from the opening range 15/30/60 mins from open breaking to the downside, Traders who trade 4+ day trades over the span of 5 business days on a margin account get their account flagged with this, Stock trading before the market opens 9:30AM EST, Trend pivots the other way taking out several highs or lows of other candles, Candle that looks like a gun or upside down T, moving average calculated by adding recent prices and then dividing that figure by the number of time periods, Flip of the time interval to produce a new candle, corrective pullback/activity - a wedge or triangle shape of the recent candles, statistic used by traders to determine what the average price is based on both price and volume, Above the reversal / continuation entry to the upside and below the reversal / continuation entry to the downside, Gamble play, risky but very rewarding, usually a fast expiry, 1 - Top wick / high / very top of the candle, The highest price the stock trading during the given time frame of the candlestick, 2 - Bottom wick / low / very bottom of the candle, The lowest price the stock trading during the given time frame of the candlestick, The price of the stock at the open of the given time frame (top or bottom of the fill depending on the color, more below), The price of the stock at the close of the given time frame (top or bottom of the fill depending on the color, more below), 3/4 The open was lower than the close, it opened at the bottom and closed at the top (price went up), 3/4 The open was higher than the close, it opened at the bottom and closed at the top (price went down), 1 Candle / Inside Bar / Inside Action / Consolidation / Sideways, Occur when the current candle falls completely within the prior candle, Balance, equilibrium, buyers and sellers agree on price, no one is in control, trying to determine where price is going next, Never trade a one bar, wait for the consolidation to stop then it's time to get into a trade, 2 Candle / Directional Bar / 2 Down / 2 Up, Occur when the current candle takes out one side of the prior candle, A 2 down means it took out the previous candle's low, but failed to take out the high, A 2 up means it took out the previous candle's high, but failed to take out the low, Sellers are selling it down or buyers are buying it up but not both, a 2 can turn into a 3, but never a 1, The market trades in the direction of the most 2's, but only trade 2's with continuation, 3 Candle / Outside Bar / Discovery Candle / Mother Bar, Occur when the current candle takes out both sides of the prior candle, Price discovery starting over, buyers willing to buy it up, sellers willing to buy it down, choppiness, Never trade a mother bar, price discovery is happening, wait for further confirmation one way or anther, Price direction is best determined when looking at multiple time frames rather than lagging indicators or moving averages, When all time frames point in the same direction in either direction, or Full Time Frame Continuity, is the ideal trading situation, Simplest explanation is = it's a compound 3 bar, Just pick a high, draw the line to a higher high, Bars should be more FLAT than not, otherwise mostly inside action (which is fine, but if you are looking for trends start flatter), Increasing price volatility and diagrammed as two diverging trend lines, one rising and one falling, It usually occurs after a significant rise, or fall, in pricing action.