Al Brooks Price Action3/24/2021
Two-legged pullbacks are more enticing to counter-trend traders and works better as a mousetrap for them.By clicking the consent button, you agree to allow the site to use, collect andor store cookies.I accept Deny cookies Go Back Price Action Trading Course Save 50 Ends 19 September Trading Setups Topics Price Action Trading Day Trading Trader Development Site Map Resources TSR Trading Guides Udemy Trading Course Trading Books Trading Indicators Forex Tester 4 NinjaTrader Kinetick Member Login Trading Setups Review Trading Strategies, Guides, and Articles for Active Technical Traders You are here: Home Trading Setups Two-legged Pullback to Moving Average (M2B, M2S) Two-legged Pullback to Moving Average (M2B, M2S) By Galen Woods in Trading Setups on December 14, 2013 Many price action traders claim that two-legged pullbacks are the most reliable trade setups.
The variant we are reviewing today is from Al Brooks, who wrote three tomes on price action trading. These three books are not an easy read, but are extremely informative for price action traders. In his books, he identified a two-legged pullback to the moving average as one of the best trade setups when there is a strong trend. Before we start, lets have a basic explanation of counting legs. Any bar that goes higher than the previous bar starts a new leg up. ![]() Trading Rules Two-legged Pullback to MA Long Trading Setup M2B Strong up trend Two-legged pullback down to 20-period EMA Enter a tick above the bar that tested the 20-period EMA Short Trading Setup M2S Strong down trend Two-legged pullback up to 20-period EMA Enter a tick below the bar that tested the 20-period EMA Two-legged Pullback to MA Trade Examples Winning Trade M2S This is 5-minute chart of ES futures contract, which is the main instrument Al Brooks trades. This trade is a beautiful example of a two-legged pullback trade. After prices crossed below the EMA, it tried to crossed back but was clearly rejected. ![]() The two short dotted lines highlight the beginning of each leg up. This two-legged pullback looked good with the long top tails that showed as prices approached the EMA. Losing Trade M2B Another session of SP E-mini futures showing 5-minute bars, which is Al Brooks recommendation as the sweet spot for day traders. The day started with swings up and down without a clear direction. However, as prices made new lows, bottom tails emerged, showing buying pressure. The up swing above the EMA seemed strong as there were eight consecutive bars with higher lows. However, there were three bear trend bars within the swing, which hinted at persistent bears. Following a two-legged pullback to the EMA, we had a bullish reversal bar as our signal bar. ![]() A key difference between the losing trade and the winning trade is how certain we were that the market was trending. In the winning trade example, we saw clear rejection from the EMA, which we did not see in the losing example. Review Two-legged Pullback to MA Continuation trades work because the trend traps counter-trend traders.
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