Chapter 17: Bar Counting: High and Low 1, 2, 3, and 4 Patterns and ABC Corrections — 详细学习笔记

来源: Book 2 (Trading Ranges) EPUB 自动提取 | 章节: Chapter 17 提取日期: 2026-05-09 | ISBN: 9781118172339 基础字数: 17,944 字

1. 章节概要

本章是 Brooks 价格行为体系中最重要的实操工具章节之一，主题为 Bar Counting（柱线计数）。Bar Counting 是 Brooks 独创的价格行为分析技术，通过计数柱线的高低点突破次数来判断市场的状态——趋势是否继续、回调是否结束、交易区间是否被突破。本章涵盖了 High 1、High 2、High 3、High 4 以及 Low 1、Low 2、Low 3、Low 4 的全部模式，以及与之密切相关的 ABC 回调结构。

1.1 核心论点

本章的核心论点是分形市场中的两腿回调特性。Brooks 在本章提出了几个关键论点：

第一个论点是市场的分形特性决定了条形计数在任意时间周期上都有效。3 分钟图、5 分钟图、60 分钟图乃至月线图，只要去除时间和价格标签，看起来几乎没有区别。唯一能辨别时间周期的方式是看是否存在大量 doji（十字星），因为 doji 密集出现在极短周期或者极低流动性的市场中。

第二个论点是柱线计数提供了可量化的入场信号。一个可靠的回调结束信号——当前柱线的高点突破前一根柱线的高点——可以通过计数来量化和标准化。High 1 意味着第一次出现这样的信号，High 2 意味着第二次，以此类推。

第三个论点是 High 2 和 Low 2 在趋势和交易区间中的表现完全不同。在强趋势中，High 2 入场位置可以高于 High 1，你是在趋势顶部附近买入（趋势延续）；在交易区间中，High 2 是从区间底部反弹后的第二次尝试，买入位置在区间中部附近。

第四个论点是 ABC 回调与 High 2 / Low 2 是同一结构的不同描述方式。ABC 关注结构形态（A 腿下跌、B 腿反弹、C 腿再跌），High 2 关注入场时机（C 腿结束后向上突破的柱线）。

1.2 在本教材体系中的位置

本章位于 Book 2 后半部分（第 17 章），建立在第 16 章（腿数分析）的基础之上。腿数分析提供了”是什么”（趋势有几条腿），而 Bar Counting 提供了”怎么办”（何时入场）。本章的内容直接为第 18 章及后续章节的进阶交易策略奠定基础。

1.3 Bar Counting 的实际交易价值

Bar Counting 的最大价值在于它提供了一个绝对的、可量化的入场框架，而不是模糊的形态识别。无论你在一张图表上看到了什么复杂的形态结构，Bar Counting 都能告诉你：

• 回调是第几腿（High/Low 1-4）
• 现在该做什么（买入、卖出还是观望）
• 如果做错了，止损应该放在哪里

这个框架消除了交易决策中的主观性，让交易者可以在任何市场条件下快速做出决定。

18. 原文提取内容

Chapter 17: Bar Counting: High and Low 1, 2, 3, and 4 Patterns and ABC Corrections

All markets are fractal. This is a mathematical concept that means that each segment of a market has the same general patterns as every lower and every higher time frame chart. If you remove the time and price labels from your charts, you will usually not be able to tell whether a chart is a 3 minute, 5 minute, 60 minute, or even a monthly chart. The only time that you can reliably approximate the time frame of a chart is when the average bar is only one to three ticks tall, because the chart will be mostly dojis and that only happens in small time frames or in markets with only minimal volume, and you should not be trading those.

Since every move on every chart will tend to be two-legged and every correction will also tend to be two-legged and every correction of every correction will tend to be two-legged, a trader who understands this tendency will find lots of opportunities.

A reliable sign that a pullback in a bull trend or in a trading range has ended is when the current bar’s high extends at least one tick above the high of the prior bar. This leads to a useful concept of counting the number of times that this occurs, which is called “bar counting.” In a sideways or downward move in a bull trend or a trading range, the first bar whose high is above the high of the prior bar is a high 1, and this ends the first leg of the sideways or down move, although this leg may become a small leg in a larger pullback. If the market does not turn into a bull swing and instead continues sideways or down, label the next occurrence of a bar with a high above the high of the prior bar as a high 2, ending the second leg. There needs to be at least a tiny trend line break between the high 1 and the high 2 to indicate that the trend traders are still active. Without this, do not yet look to buy, since the high 1 and high 2 are more likely just part of a channel down that is forming a complex first leg down.

In a strong upswing, the high 2 entry can be higher than that of the high 1, and in a strong downswing, a low 2 entry can be lower than that of the low 1. Incidentally, a high 2 in a bull trend and a low 2 in a bear trend are often referred to as ABC corrections, where the first leg is the A, the change in direction that forms the high 1 or low 1 entry is the B, and the final leg of the pullback is the C. The breakout from the C is a high 2 entry bar in a bull ABC correction and a low 2 entry bar in a bear ABC correction.

There is an important difference between a high 2 in a bull trend and a high 2 in a trading range, and between a low 2 in a bear trend and a low 2 in a trading range. For example, when there is a high 2 setup in a bull trend, it is usually at or above the moving average and the trend is strong enough for you to buy near the high of the day. You are buying a continuation pattern in a trend and therefore can buy near the top of the trend. However, when you are buying a high 2 in a trading range, you are usually looking to buy a reversal where the setup is below the moving average and near the bottom of the range. If you think that the market is in a trading range, it is risky to buy a high 2 above the moving average and near the high of the trading range. In fact, since this trade will likely fail, you should instead consider shorting using a limit order at or above the high of the high 2 signal bar. If the high 2 is likely to fail, why would it ever trigger? It triggers because the bears are looking to short above bars, and less so just below the highs of bars. They place limit orders to short at and above the high of the prior bar. With a relative lack of bears willing to short just below the high of the bar, the bulls are unopposed and are able to push the market above the high of the prior bar, hoping that lots of bulls will enter on buy stops. The high of the bar acts as a magnet, and the push above the bar is a small buy vacuum. The bulls find that there is an overwhelming number of bears waiting to short there. The result is that the high 2 triggers, but the market immediately turns down. Those bulls who bought over the last several ticks quickly see the lack of a rally above the high of the prior bar. Because the market is not doing what they expected, they exit and will not look to buy again for at least a few bars. Their selling out of their longs contributes to the sell-off. The opposite is true of a low 2 in a trading range. You should only look to sell a low 2 above the moving average and near the top of the trading range because you are trading a reversal and not a continuation pattern. You are trying to short the end of a leg up and are therefore trading against a small trend. If one forms near the bottom of a trading range and you believe that the market is now in a trading range and not in a bear trend, it is better to buy at or below the low 2 signal bar, expecting the low 2 to fail and form a type of double bottom. These expected failures usually happen when the market appears to be trending but you think that the market has instead entered a trading range.

A high 1 in a bull trend and a low 1 in a bear trend can have different risk/reward profiles depending on where each is in the trend. For example, if the market is bottoming and it forms a failed low 1, buying above the bar is taking the first high 1 entry of the new bull trend. The odds of success might be only 50–50, but the risk is small and the potential reward is large. You have a small chance of making a big profit. A high 1 long trade after the initial spike up in a new bull trend has a high probability of being at least a successful swing trade. The risk is small and the potential reward and probability of success are high. However, if the market is forming its third consecutive high 1 setup, the odds of a swing are small so traders should scalp. This means that the risk and potential reward are both small, and the probability is less than it was for the first high 1.

Some bull pullbacks can grow further and form a high 3 or a high 4. When a high 4 forms, it sometimes begins with a high 2 and this high 2 fails to go very far. It is instead followed by a bear breakout and another two legs down and a second high 2, and the entire move is simply a higher time frame high 2. At other times, the high 4 is a small spike and channel bear trend where the first or second push down is a bear spike and the next pushes down are in a bear channel. If the high 4 fails to resume the trend and the market falls below its low, it is likely that the market is no longer forming a pullback in a bull trend and instead is in a bear swing. Wait for more price action to unfold before placing a trade.

When a bear trend or a sideways market is correcting sideways or up, the first bar with a low below the low of the prior bar is a low 1, ending the first leg of the correction, which can be as brief as that single bar. Subsequent occurrences are called the low 2, low 3, and low 4 entries. If the low 4 fails (a bar extends above the high of the low 4 signal bar after the low 4 short triggered), the price action indicates that the bears have lost control and either the market will become two-sided, with bulls and bears alternating control, or the bulls will gain control. In any case, the bears can best demonstrate that they have regained control by breaking a bull trend line with strong momentum.

If the market is in a clear bull trend, do not look for low 1 or low 2 shorts, because those are setups only in bear trends and trading ranges. If the market is in a clear bear trend, do not look for high 1 or high 2 buys, because those are setups only in bull trends and trading ranges. In fact, if the market is in a bear trend, you can often look to short above the high of the prior bar because buying a high 1 in a bear trend is a low-probability trade. That means that if it has only about a 40 percent chance of being a successful long, it has about a 60 percent chance of hitting the protective stop before hitting a profit-taking limit order. If you are scalping on the 5 minute Emini chart, then there is a 60 percent chance that the market will fall and hit a two-point stop before it hits a limit order five ticks above the signal bar. So if there is a 60 percent chance it will fall two points before rising five ticks, this is a great setup for a short. Likewise, you can look to sell above the high of any bar in a strong bear trend or in a bear channel, and you can look to buy a low 1 in a bull trend and to buy below the low of any prior bar in a bull trend or in a bull channel.

As you are counting these pullbacks, you will often see the market continue its correction instead of reversing, in which case you have to change your perspective. If you thought that the market was in a trading range with simply a strong new high and then see a low 2 above the old high (a sell setup), but instead of falling, the market continues up, you should begin to look for high 1 and 2 buy entries. It is likely that the bull strength is sufficient for you to be trading only longs. You should defer looking for low 1 and 2 shorts until the bears demonstrate enough strength to make a tradable down move likely (like a bull trend line break followed by a failed test of the swing high).

Notice that in trading ranges, it is common to see a high 1, high 2, low 1, and low 2 all present in the course of 10 bars or so, even though a high 2 is bullish and a low 2 is bearish. Since the market is sideways, neither the bulls nor the bears are controlling the price action for more than a brief period, so it makes sense that each side will try to wrest control, and as each tries to assert itself, bull or bear patterns will form. It is very easy to see lots of high and low 1 and 2 patterns in trading ranges, and it is very important that you do not overtrade. When the market is mostly sideways with lots of overlap among the bars and the range is not a small flag in a very strong trend, most traders should step aside and not take any trades. Why is that? If you are looking for a high 2 or a low 2, you are looking to enter on a stop at either the top or the bottom of a tight trading range and you are doing the exact opposite of what the institutions are doing. When the market goes above the high of the prior bar in a tight trading range, they are taking profits on their longs or they are shorting, so you do not want to be buying. Your job is to follow what they are doing; it is not to ignore what they are doing and to fool yourself into believing that you have some magical setup that will make you a lot of money as long as you keep trading it. Tight trading ranges can form as small flags in very strong trends, and when they do it is reasonable to look to enter on a stop on the breakout of the range. For example, if there is a strong four-bar bear spike and there is no climax or strong reversal as the market goes sideways for 10 bars, it makes sense to go short on a stop below a bear trend bar. But if instead the day is a trading range day and the tight trading range is in the middle third of the day, most traders should never place a trade based on bar counting.

When the market is in a tight trading range, it often reverses direction repeatedly, so if you take every high 1, 2, 3, and 4 and also short every low 1, 2, 3, and 4, over the course of an hour you will lose all of the money that you made in the past week. In Chapter 22 on tight trading ranges, I discuss this in more detail. There are no magical setups, and every setup has an environment where the math gives it an edge, as well as other environments where it will lose. Trading based on bar counts requires a market that has swings. If the market is in a tight trading range, do not trade unless you are a very experienced trader and you are comfortable shorting above the high of the prior bar instead of buying there on a stop, and buying below the low of the prior bar instead of shorting there on a stop.

There are variations on this numbering, but the goal is still to help spot two-legged corrections. For example, in a strong bull trend, a two-legged pullback can form and have just a high 1 but functionally be a two-legged pullback. You can infer it from the appearance on the 5 minute chart, and you can confirm it by looking at a smaller time frame chart, although this is not necessary. It does not matter if you call it a high 1 on the chart in front of you, a high 2 variant, or a smaller time frame high 2, as long as you understand what the market is doing. If there is a bear close (or two), this can represent the first leg down even if the next bar does not extend above the high of the bear bar. If that next bar has a bull close but its high is still below the trend high, it then becomes the end of the first down leg if the next bar or so is again a bear trend bar. If the next bar extends below its low, look for a bar within the next few bars that extends above the high of its prior bar, ending the two legs down. View each bar as a potential signal bar, and place a buy stop at one tick above its high. Once filled, you now have a variant of a high 2. This entry bar is, strictly speaking, just a high 1, but treat it as a high 2. That bear bar at the start of the pullback was followed by a bar with a bull close. On a smaller time frame, this was almost certainly a small down leg followed by an up leg that became a lower high, and then finally another push down to where the high 2 ended the second leg.

Pullbacks often grow and evolve into larger pullbacks. For example, if there is a bull trend and a high 1 long entry fails to reach a new high and instead there is a lower high and then another leg down, traders will look for a high 2 setup to buy. If the high 2 triggers but the rally does not go very far and the market turns down again below the low of the high 2 signal bar, traders will then look to buy either a high 3 (a wedge or a triangle) or a high 4 pullback. Whenever there is a strong breakout below a high 2 or wedge (high 3) buy signal bar, the market usually will have at least two more pushes down. If the breakout below the high 2 signal bar is not strong and the entire move down has a wedge shape and reverses up from a trend channel line, then the high 3 is forming a wedge bull flag and is often a reliable buy setup. Remember, this is a pullback in a bull trend, and not a reversal attempt in a bear trend, where traders need a clear demonstration of bullish strength before looking to buy, as discussed in the section in book 3 on reversals. If the breakout below the high 2 buy signal bar reverses up after a second push down and the four pushes down are in something of a channel and does not look particularly strong, it is a high 4 buy setup. Some high 4 buy setups are simply high 2 buy setups on higher time frames, where the two legs each subdivide into two smaller legs. If the breakout below the failed high 2 has strong momentum and the entire pullback from the top of the selloff is in a relatively tight channel, then buying the high 3 is risky. Instead, traders should wait to see if there is a breakout above the bear channel and then a breakout pullback. Whenever a trader wonders if the channel down might be too strong to buy above a high 3 or high 4 signal bar, he should treat the setup like any other channel breakout, as was discussed in book 1. Wait to see how strong the bull breakout is before looking to buy. If the breakout is strong, then traders can look to buy a pullback. If it is so strong that it has a series of bull trend bars without a pullback, which can happen but is unusual, the market would have become always-in long and traders can buy for any reason, including on the close of any strong bull trend bar. Since the stop is below the bottom of the spike, which can be far away, the position size should be small. If instead the market falls below the low of the bar 4 signal bar, the market is likely in a bear trend and traders should start to look to sell rallies rather than to continue to look to buy.

The opposite is true in a bear rally. If the low 2 short fails and the market continues to rally, look at the momentum of the move up from the failed low 2. If it is not too strong and the market is in a channel, especially if it has a wedge shape, look to short the low 3, which would be a wedge bear flag. If the momentum up is very strong, like if there is a two- or three-bar strong bull spike up from the failed low 2, look for at least two more legs up and do not short the low 3. Short the low 4 only if the overall picture supports a short, and do not short if you believe that the market has now converted into a bull trend.

As is discussed in the chapter on reversals in the third book, when traders are looking for a reversal down, they often look for a high 1, high 2, or triangle (a high 3) pattern that they expect will fail and become the final flag of the bull leg, and then short above the buy signal bar. Since the breakout is a test of the high, it creates a double top (the breakout might form a lower high or a higher high, but since it is a second push up and it is turning down, it is a type of double top, as discussed in book 3). When a person shorts above a high 2 buy signal bar, he is expecting the market to trade down into a trading range or new bear trend. Since a double top is two pushes up, and the trader is expecting that it is at the top of a trading range or new bear swing, and is also a low 2 sell setup (selling below the low of the bar that created the double top). Almost every reversal down comes from some form of double top. If the top is after just a small leg up in a trading range, the double top will often involve only a few bars and be a micro double top. The same is true of most bottoms. They form from failed low 1 or low 2 or triangle breakouts, which create double bottoms and final flag reversals up. Since a trader is expecting a move up into a trading range or a new bull, a double bottom is also a high 2 buy setup, with the entry at one tick above the high of the bar that created the last push down to the double bottom.

High 3 and low 3 patterns should be traded like wedges (or a traditional triangle, if the pattern is mostly horizontal) because functionally they are the same. However, to keep the terminology consistent, it is better to call them wedges when they act as reversal patterns because by definition a high 3 is a pullback (a wedge bull flag) in a bull trend or trading range, and a low 3 is a wedge bear flag in a bear trend or a trading range. For example, if there is a bull trend or a trading range, a high 3 means that there were three legs down, and that sets up a buy signal above the high of the signal bar. If there is a bear trend, you are looking for low 1, 2, 3, and 4 setups and not high 1, 2, 3, and 4 patterns. If there is a clear wedge bottom in a bear trend, you should look to buy the reversal; but since it is in a bear trend, you should call this a wedge bottom and not a high 3. Likewise, if there is a bear trend or a trading range, a low 3 means that there were three pushes up and you should trade it like a wedge top. If there is a bull trend, you should not be looking for a low 3 to short, but shorting below a wedge top can be acceptable.

There is also a variation for a failed high/low 4. If the signal bar for the high 4 or low 4 is particularly small, especially if it is a doji, sometimes the entry bar will quickly reverse into an outside bar, running the protective stops of the traders who just entered. When the signal bar is small, to avoid a whipsaw it is often best to place your protective stop at more than one tick beyond the signal bar (maybe three ticks, but no more than a total of eight ticks from your entry in the Emini when the average range is about 10 points) and still to treat the pattern as valid even though technically it failed, albeit by only a tick or so. Remember, everything is subjective and a trader is always looking for something close to perfect, but never expecting perfection, because perfection is rare.

Be aware that complex corrections on the 5 minute chart often appear as simple high/low 1 or 2 corrections on higher time frame charts. It is not worth looking at the higher time frame charts since the trades are evident on the 5 minute chart and you risk distracting yourself looking for rare signals and missing too many 5 minute signals.

A high 1 buy setup is a failed attempt by the market to reverse down, and a low 1 short setup is a failed rally attempt in a bear trend. Because strong trends usually continue, reversal attempts almost always fail. You can profit by betting on the failure. You enter exactly where those trapped faders (traders trading against the trend) will exit with their losses. Their exit stop is your entry stop.

The most reliable high 1 and low 1 entries occur when there is a false breakout of a micro trend line in the spike phase of a trend, which is the strongest segment of the trend. Traders see a spike and start looking to buy a high 1, but they are overlooking the second critical component of a high 1 buy setup. The final component is a filter—do not take a high 1 following a significant buy climax, and don’t take a low 1 short after a significant sell climax. Yes, you need a bull spike; but you also need a strong bull trend. One of the most common mistakes that traders make is that they trade on hope and buy every high 1, expecting a trend to follow. Instead, they have to force themselves to wait for the bull trend to form and then look for a high 1. If the bull spike is strong, but still below earlier highs on the chart, the market might still be in a trading range, which makes buying above a high 1 riskier. The high 1 buy setup could easily turn into the final flag of the rally before a big correction or a reversal. The bull spike that is racing up might be due to a buy vacuum test of the trading range high and not a new bull trend. If both the bulls and the bears expect the top of the trading range to get tested, once the market gets close to the top, the bulls will buy aggressively and relentlessly, confident that the market will make it up to the magnet that is just a little higher. The strong bears see the same thing and stop shorting. Why should they short now when they can sell at an even better price in a few minutes? The result is a very strong bull spike that leads to a reversal once it reaches around the top of the trading range, at which point smart traders would not be buying the closes of the strong bull trend bars or the high 1 buy setups. In fact, many would be shorting, using limit orders, since they expect that this breakout attempt will be like most strong breakout attempts, and will fail. For traders to buy a high 1, they need a strong bull spike and a bull trend, not simply a spike up within a trading range. Also, they should not buy the high 1 if the bull spike ended with too strong a buy climax.

The same is true for a low 1 short. Wait for the bear trend, not just a bear spike within a trading range, and then look for a spike with a low 1 sell setup. Don’t simply short every low 1 after every spike, because most spikes occur in trading ranges, and shorting a low 1 at the bottom of a trading range is a losing strategy because the low 1 setup has a good chance of being the final flag in the leg down; the market might then have a large correction up or even a bull reversal. If traders are looking to buy a high 1 or short a low 1, they should do so only in the spike phase of a trend and not take the trade if there is evidence of a possible climax. For example, if you are looking to buy a high 1 setup, you are betting that the pullback will be minimal and have only one leg. Many high 1 setups are just one- or two-bar pullbacks after sharp three- to five-bar spikes, while others are four- or five-bar pullbacks to the moving average in extremely strong trends that have run for five to 10 bars, which can be a little too far, too fast. If you are buying such a brief pullback, you believe that there is tremendous urgency in the market and that this brief pullback might be your only chance to buy below the high of what you believe is a very strong bull trend. If the market goes sideways for five bars and has several small dojis, the market has lost its urgency and it is better to wait before buying. If a high 2 forms, it is a safer buy setup.

The most common reason for a trader failing to buy a high 1 pullback is that the trader was hoping for a larger pullback. However, it is important to get long when there is a strong bull trend, and traders should place a buy stop above the prior swing high, in case the pullback is brief and the bull trend quickly resumes. The same is true in a strong bear trend. If the three criteria for shorting a low 1 are present (a strong bear trend, a strong bear spike, and no strong sell climax), traders must get short. If they are deciding whether to place an order to short below a low 1 signal bar, they should place an order to short at one tick below the swing low. Then, if they end up not shorting the low 1 and the market races down, they will be swept into the strong bear trend. This is far better than watching from the sidelines and waiting for the next pullback. If they short the low 1, they can then cancel the order to short below the swing low.

If that high 1 is such a reliable buy setup in the spike phase of a strong bull trend, how could it possibly form when the institutions know that there might be an 80 percent chance of the trend resuming and being followed by a new high? Why would they ever allow the pullback if they believe the market will go higher? It is because they created the pullback. The spike was caused by many firms simultaneously buying relentlessly, which means that they were scaling into their long positions during their buy programs. At some point, each of those firms will start scaling out of its position, and once enough of them stop buying and begin to sell out of their positions, a bar will form with a low that is below the low of the prior bar. Many other firms will buy as the market falls below the other bar, but just for a scalp if the trend is not too strong. From this point on, firms will all be scaling out; because of this, the breakout above the high 1 setup often results in only a scalp. In the very strongest of trends, it is a swing trade and there might be one or two more high 1 setups at a higher level and then some high 2 buy setups; but in all cases, pullbacks are caused by institutions taking some profits from their lower entries. They are in the business of making money, which means that they have to take profits at some point, and when enough of them begin to take partial profits at one time, they create bull flags, like high 1, high 2, or larger pullbacks. The opposite is true in bear trends.

This is an important observation because you now see that you should buy a high 1 long setup only when the trend is very strong, which usually means only in the spike phase and only when the market is clearly in a trend. Finally, don’t buy a high 1 after a climax or a reversal, and do not buy a high 1 pullback at the top of a trading range because the bull trend has not yet broken out. High 1 buy setups at the tops of strong bull spikes and low 1 short setups at the bottom of strong bear spikes are common in trading ranges and are usually traps. In fact, they are often good fade setups. For example, if a high 1 is setting up at the top of a trading range, especially if the signal bar is a doji bar, it is often sensible to place a limit order to short at or above the top of the high 1 buy signal bar. Since you expect the high 1 long to fail, you think that it will reverse and hit a two-point stop before it will go six ticks and fill your profit-taking limit order for a one-point scalp. When you expect a high 1 long failure, you believe that the probability of the protective stop being hit before the profit-taking limit order is filled is at least 60 percent. If you fade the high 1 by going short with a limit order at the high of the signal bar, you expect that it will not go six ticks up and you can therefore use a six-tick protective stop. Since you feel that it is a bad buy setup, you believe that it will fall seven ticks below your entry price, which is eight ticks below the long entry price of the bulls who bought on a stop at one tick above the signal bar. This means that you can scalp out of your short with a six-tick limit order and have at least a 60 percent chance of making six ticks while risking six ticks, which is a good trade. You can also place a limit order to go long at or below the low of a low 1 short signal bar if it forms at the bottom of a trading range and you believe that a low 1 short would fail.

If that high 1 at the top of the trading range was so strong, why was the spike not strong enough to break far above the trading range and have several bars of follow-through? The market is telling you that the spike is not very strong and you should therefore listen. Just because the spike has four bull trend bars does not make it the spike phase of a strong bull trend. Look at the entire chart and make sure that the spike is part of a strong trend and not just a trap at the top of a trading range. Remember, the market often has strong bull spikes at the tops of trading ranges because the strong traders step aside and don’t sell until the market gets to the top of the range or even breaks out for a bar or two. The bulls then sell out of their longs to take profits and the bears sell to initiate new shorts. This vacuum sucks the market up quickly but it has nothing to do with a trend. Traders are very eager to sell but it does not make sense for them to sell if they think that the market will go up several more ticks to test the top of the range. Instead, they stop selling and wait for the market to get there; then they appear out of nowhere and the strong rally reverses, trapping beginners into buying near the high of the day. A high 1 is a buy setup only in a clear bull trend and not in a spike near the top of a trading range. A low 1 is a short setup only in a clear, strong bear trend.

High 1 and low 1 patterns are with-trend setups, so if one occurs within a pullback in a trend but in the direction of the pullback and not the trend, do not take the trade. Instead, wait for it to fail and then enter with the trend on the breakout pullback. For example, if there is a bull trend and then a four-bar-long bear micro trend line forms at or above the moving average, do not short the failed breakout above the trend line. You do not want to be shorting a bull trend at the bottom of a pullback near the moving average, which is commonly near the end of the pullback. Instead, look for this failure to fail and turn into a breakout pullback, which will be in the direction of the trend (up). There is a breakout above the bear micro trend line that failed. The failed breakout traded down briefly, but it failed to go far and it reversed up. Once it reversed up, the reversal up was a breakout pullback entry from the initial breakout above the micro trend line. However, if the bear leg has four or more consecutive bear trend bars and the failed micro trend line setup is below the moving average, it will likely be a profitable short scalp, even though the day may be a bull trend day.

Trends have trending highs and lows. In a bull trend, each low is usually above the prior low (a higher low) and each high gets higher (a higher high); in bear trends, there are lower highs and lower lows. In general, the terms higher high and higher low are reserved for situations in which a bull trend appears to be in place or in the process of developing, and lower low and lower high imply that a bear trend might be in effect. These terms imply that there will have been at least a minor trend line break, so you are considering buying a higher low in a bull trend (a pullback) or in a bear trend (countertrend but it may be a reversal) and selling a lower high in a bull trend or a bear trend. When trading countertrend, you should scalp most or all of your position unless the reversal is strong.

Once a high 2 long triggers in a bull trend or in a trading range, if the market then reverses and trades below the low of the pattern before reaching at least a scalper’s profit, the high 2 buy has failed. Likewise, if there is a low 2 short entry in a bear trend or in a trading range and the market fails to reach at least a scalper’s profit and instead breaks out above the top of the pattern, the low 2 sell has failed. The most common cause of a high or low 2 failure is that the trader is in denial about a trend reversal and is still looking for trades in the direction of the old trend.

A high or low 2 is one of the most reliable with-trend setups. If a trade fails, the pattern will usually evolve and get either one or two more corrective legs. For example, if the market is moving down in a pullback in a bull trend or in a trading range and forms a high 2, but within a bar or two a bar trades below the low of the signal bar, the high 2 has failed to reverse the market upward out of the bull flag. When that happens, the downswing will usually try to reverse up again in a high 3 or a high 4. The high 3 represents three pushes down and is therefore a variation of a wedge. If the market is more likely to continue lower, you would get stopped out of your long if you bought the high 3. However, if you simply always wait for a high 4, you will miss many good high 3 long trades. The market often gives traders a clue as to which scenario is more likely. That clue comes in the form of the momentum that follows the failed high 2. If the market does not significantly change its momentum from that of the down move, it is more likely that the market will reverse up on the high 3, creating a wedge bull flag buy signal (and the breakout below the high 2 becomes an exhaustion gap, instead of a measuring gap). If instead there is a large bear breakout bar or two, this increases the odds that there will be at least two more legs down, and traders should wait for the high 4 before looking to buy. In this case, the breakout bar is likely to become a measuring gap and lead to a measured move down. Whenever there is a strong spike, many traders will start the count over again and will expect at least two more legs down before they are willing to buy again. The reversal up after the first leg is the first attempt to break out above the steep bear trend line and is therefore likely to fail. The second attempt up is the breakout pullback from that breakout, and, since it is a breakout pullback (whether it is a lower low or a higher low), it is more likely to succeed. If the market reverses up from the high 4 after the failed high 2, usually the pattern is simply a complex high 2 where both legs subdivided into two smaller legs. This is usually evident on a higher time frame chart, where a simple high 2 will often be clearly seen. If that high 4 fails, the market is more likely now in a bear trend instead of just a pullback in a bull trend, and traders should then reevaluate the strength and direction of the market before placing any more trades.

The opposite is true in a rising leg in a bear trend or a trading range. If the low 2 triggers a short entry, but within a bar or two there is a bar that trades above the high of the signal bar and the momentum is unremarkable, a profitable low 3 setup (a wedge bear flag) is more likely. However, if there are a couple of large bull trend bars, then the breakout is strong and the market will likely have at least two more legs up, so traders should not short the low 3. Instead, they should wait to see if a low 4 sets up. If the momentum up after the low 3 is very strong, the market is likely in a steep bull channel and it is better not to short the low 4, which is the first breakout of the bottom of a strong bull channel. Instead, traders should wait to see if a higher high or lower high breakout pullback sets up. If so, this is a second-entry short and a lower-risk trade. However, if the bull channel is not very tight and there is some reason to look for a top, such as the low 3 being a small final flag or a second attempt to reverse down after moving above a swing high or a reversal from a higher time frame bear trend line, then traders can short the low 4. Low 4 signal bars are often small, and when they are, the market often quickly reverses up and runs the protective stops above the low 4 signal bar, and then once again reverses down into a good bear swing. Because of this, when there is a small low 4 or high 4 signal bar, use a money management stop of about two points in the Emini instead of a price action stop beyond the signal bar.

The key to understanding the concept of high/low 2 setups is to remember its intent. The idea is that the market will tend to make two attempts at anything, and in its attempt to correct, it frequently will try twice to reverse the trend. The advantage of buying a high 2 pullback in a bull trend is that there is very little thought involved and it is easy to do. The difficulty comes when a correction has two attempts but does not form a clear high or low 2. That is why it is necessary to look at variations—you can make money by trading two-legged pullbacks even when they don’t offer a perfect high or low 2 setup.

The most obvious two-legged move has two clear swings with an opposite swing in between that breaks a minor trend line and usually forms a high 2 pullback in a bull trend or a low 2 in a bear trend (an ABC correction). However, there are less clear variations that provide just as reliable trades, so it is important to recognize these as well. Any time that you see a correction where you can infer two legs, then you have found an acceptable pattern. However, the further from the ideal it is, the less likely it will behave like the ideal.

A high 2 in a bull trend is more reliable than in a trading range. When there is a bull trend, the market has pullbacks along the way, which are created both by profit-taking bulls and by aggressive shorts. Most of the time, the top looks like it might be good enough for a scalp, and that draws in new bears who are hoping for a reversal. There might be a good-looking bear reversal bar, a wedge, a buy climax, or some other pattern that leads them to believe that the market has a reasonable chance of reversing, and they therefore short. If the market pulls back, they begin to feel confident. If the market forms a high 1 long, many will continue to hold short since they are hoping for a bear trend or at least a large correction in the bull trend, and they accept the high 1 as a possible lower high that will be followed by lower prices. When the market turns down from that lower high, they are feeling more confident. However, they will not hold on to their shorts if the market turns up a second time. If it does, that would be a high 2 long entry. The bulls will see the setup as two attempts to drive the market down where both failed, so they will buy the high 2 long. The bears will see it the same way, and if both fail, they will give up, buy back their shorts, and wait for another signal before shorting again. The relative absence of bears for the next bar or two and the renewed eagerness of the bulls make the high 2 a reliable setup in a bull trend. Most of the time, it forms at or near the moving average.

The opposite is true of a low 2 in a bear trend, where low 2 setups are more reliable than in trading ranges. The bear trend will have pullbacks, and invariably the start of the pullback will be just confusing enough to make the bulls wonder if it might be a trend reversal, so they begin to buy, and the bears will wonder if it might lead to a stronger correction up, so they begin to take profits, buying back some of their longs. The result of this buying by both the bulls and the bears is a rally, but at this point neither the bulls nor the bears know if it will be a reversal or just a bear flag. The early bulls might allow one move against them in the form of a low 1, since it might form a higher low, but they will not hold on to their longs if the market moves against them twice. They will exit on the low 2 and not buy again for at least a couple of bars. Also, the bears will short the low 2, so their shorting, coupled with the selling by the bulls (they are selling out of their longs) and the absence of new bulls, results in an imbalance in favor of the bears. Just like with a high 2 in a bull trend, a low 2 in a bear trend usually forms as a pullback to or near the moving average.

A three-push top is often a variation of a low 2, even though it is actually a low 3. Whenever the first leg is strong and disproportionately large or strong compared to the next two legs, you have something that looks enough like a wedge to behave like a wedge. The low 1 that follows that strong first leg is followed by two weaker legs that can often be seen as just one leg made of two smaller parts. The entry is on the low 3, at the completion of the wedge, but it can also be thought of as a low 2. However, the numbering becomes irrelevant because you are faced with a three-push pattern, and it should behave like a wedge reversal whether you choose to call the entry a low 3 or a low 2. Don’t spend too much time on the intellectual side here. Remember, most really smart academics can’t trade, so as ideal as intellectualism and perfection are, you will lose money if you fight the market and insist that it behave perfectly like it is often described in textbooks.

The opposite is true in three-push bottoms, where the second of the two legs can often be seen as breaking into two parts and you have what appears to be a high 3 but functions like a wedge and like a high 2. In other words, the market should go up for at least a scalp, regardless of how you choose to number the legs.

Some traders look for countertrend scalps against strong trends. For example, if there is a strong bear trend and then a bull reversal bar forms, overly eager bulls might buy above that bar. Since they are trading against a trend, they will often allow a pullback, like a low 1 short. They expect the low 1 short to fail and become a higher low, and they might hold long to see if that will be the case. However, if the market does not reach their profit target and instead forms a low 2 setup, most traders will not allow the trend to resume a second time and they will sell out of their longs as the low 2 triggers. If the low 2 does not trigger and the market has one more small push up and sets up a low 3, this is a wedge bear flag, and the longs will exit if it triggers. They know that there is a possibility that their trades still might work as long as the market does not fall below the small higher low, but they realize that the odds are too strongly against them. More experienced traders would not have bought that reversal and instead would have waited to short below the low 2 or 3 signal bar, which is a very strong setup in a bear trend. As the market falls below the higher low, the bear trend often accelerates as the final bulls give up and sell out of their losing longs. In general, if you ever buy early, always get out and even reverse if the market triggers a low 2 or 3 short, especially if there is a strong bear signal bar, because this is one of the most reliable sell setups. Similarly, if you short a strong bull trend, always get out if a high 2 or 3 triggers, especially if there is a strong bull signal bar, which creates one of the strongest buy setups. If you are emotionally able to reverse, you usually should.

📊 Figure 17.1

Don’t lose sight of the goal in bar counting. Focus on the pullbacks and not on the high 1s, high 2s, low 1s, and low 2s. Most of the time when the market is in a bull trend or in a trading range, you are looking to buy two-legged pullbacks, like the high 2s above bars 4, 7, 13, or 17 in Figure 17.1 , and even then you should not mechanically buy every one. For example, there were two legs down to bar 15, the first being the channel down to bar 13. However, bar 15 was the fourth consecutive bear bar and it followed a strong bear trend bar two bars earlier. Also, the second leg was much smaller than the first so there might be more to go. When there are problems with a setup, it is better to wait.

Why wasn’t bar 10 a good high 1 long setup? Because it was after a buy climax at the end of a bull leg and final flag (bar 8) and the market was likely to correct sideways to down for about 10 bars or more in two or more legs. Whenever there is a relatively large bull trend bar after the market has been trending up for a while, it might represent a temporary exhaustion in the trend. If a trend might be exhausted, it is no longer a strong bull trend and therefore a high 1 is not a good buy setup. This is also the reason why bar 11 was not a good buy setup. Since the market was still in the process of correcting after the buy climax, it was in a trading range phase and it is risky to buy a high 2 above the moving average in a trading range.

Bar 17 was a better high 2 long setup. It was the end of a complex two-legged correction where each leg subdivided into two legs, and the larger legs were of similar size and the small legs were of similar size, so the shape was good. Also, although in hindsight the market had converted into a bear trend, at this point there was still enough two-sided trading to consider it a trading range and therefore buying a high 2 was reasonable. The larger second leg down began at bar 14 and ended at bar 17, and the high 2 can be thought of in three ways: as being a high 4, as being a high 2 of the two larger legs where bar 13 was the high 1 end of the first leg, or as being a high 2 of the two smaller legs where bar 15 was the end of the first leg.

Although high 1s and low 1s are common, they rarely are good setups except in the strongest trends. Since a high 1 usually occurs near the top of a leg, you should buy it only if that leg is in the spike phase of a bull leg. Bar 8 is an example of a good high 1 because it formed in a strong bull trend that had six consecutive bull trend bars and each bull body had little, if any, overlap with the body of the bar before it. Almost all high 1s in bull spikes and low 1 pullbacks in bear spikes will be micro trend line breakouts.

Similarly, bars 25 and 27 were good low 1 short setups in a bear spike. There was a strong bear trend, a strong bear spike, and no strong sell climax, at least not at bar 24. Sometimes it is more descriptive to call the setup something other than a bar count setup, and bar 27 was a good example. Yes, it was a low 1 in a strong bear trend, but some traders would have been concerned about the strong bar 26 bull reversal bar. They would then have concluded that the bear trend was no longer strong enough to be shorting a low 1. However, they might have wondered if the market was starting to enter a trading range, because this was the second attempt to reverse up, and they might then have wondered whether bar 26 might actually be a high 2 at the bottom of an incipient trading range, where bar 24 set up the high 1. They would still have shorted below the bar 27 low 1, but not because it was a low 1. Instead, they would have shorted it because they saw it as a failed high 2 in a bear trend and they knew that the high 2 would have trapped bulls after that strong bar 26 reversal bar.

Since the market was in a strong bear trend at bar 25 and you could not buy above the high of the prior bar, you could have shorted above the high of the prior bar, bar 24, and you could have sold more below bar 25.

Deeper Discussion of This Chart Bar 1 in Figure 17.1 was an attempt to be the start of a trend from the open bull trend on a large gap up day, but it failed on the very next bar, which became a bull trap (it trapped bulls into a losing trade). Since that bear reversal bar traded above bar 1 and turned down, it can be thought of as a failed high 1. This makes bar 2 a high 2 long setup, but after that bull trap, it was better to wait for a second leg down and at least one good bull body before looking to buy again. Also, the move down to bar 2 was a micro channel and the breakout above the channel would be likely to have a pullback, so it was better to wait for that pullback before looking to buy. Do not worry about unclear bar counting like this; instead, focus on the goal of finding a two-legged pullback to buy. The point that is worth noting here is that on many days when the second bar of the day trades above the first and then the market trades down, that second bar often becomes a high 1 in a high 2 buy setup, and you should be ready to buy that high 2 if the setup looks good. Although the bar 2 high 2 led to a profitable scalp, it would have been a stronger buy setup if bar 2 had been a bull reversal bar, especially if its low had been below the moving average. Bar 20 was a two-legged pullback to the moving average (the bull trend bar two bars earlier was the first push up) and therefore a reasonable short setup. However, the market traded above the entry and signal bars two bars later on bar 21. That formed a small third push up that trapped bulls in who bought a failed low 2, and trapped bears out who let themselves get stopped out above the high of the bar 20 short signal bar. This is an example of a wedge bear flag. Whenever the market is below the moving average, traders are looking for shorts, and when there are both trapped bears and bulls, the odds of a successful short signal go up. The bulls will stop themselves out, and their selling as they exit their longs will help push the market down further. The bears who were just stopped out will now panic and be willing to chase the market down, adding to the selling pressure.

📊 Figure 17.2

The high and low 1 setups in the chart on the left in Figure 17.2 formed within a trading range and were not good trades. Those in the chart on the right were in clear bear and bull trends and were great setups. Just because the market has a strong bull spike and a high 1 buy setup does not mean that you should buy it, and you should never short a low 1 unless there is a strong bear trend.

By bar 7, the market had had five reversals, the range was small, and most of the bars overlapped with prior bars. The day was in a trading range and clearly not in a strong bull trend. Two bull trend bars formed a strong spike up from the lower low at bar 5, and it broke above the bar 4 lower high. Bulls were hoping that the day would break out to the upside and form a bull trend, and it could have, except for market inertia. Trends tend to keep trending and reversals usually fail; trading ranges keep going sideways and breakout attempts usually fail. Bar 7 was a high 1 buy setup after a strong bull spike, but it was in a trading range day. It also had a doji signal bar, which represents two-sided trading. This is a bad buy setup and, in fact, aggressive traders expected it to fail and shorted on a limit order at and above the bar 7 high.

Bar 9 was a high 2 setup above the moving average and in a trading range and therefore was likely to fail.

Bar 11 was the fourth bear trend bar in a bear spike that broke to a new low of the day. However, this is a trading range day. It might become a trend day but it is not one yet and therefore a low 1 at the low of the day will likely fail, especially with a doji signal bar. Aggressive bulls bought at or below the low of bar 11, expecting the shorts to be trapped.

Compare those setups with those in the chart on the right. The market was in a trend from the open consisting of three large bear trend bars with small tails and little overlap, and broke far below yesterday’s low. This was a clear, strong bear trend with lots of urgency. Bar 22 was a one-bar pullback, and traders aggressively shorted below this low 1 short setup. In fact, traders were so confident that the market would go below the low of the spike that many shorted on limit orders at and above the bar 21 high.

There was another sell climax to the low of the day, which is often followed by a two-legged correction and sometimes a trend reversal. Six bull trend bars created a rally to the moving average, and the bars had very little overlap, big bodies, and small tails. There was urgency to the buying, and everyone was waiting for a pullback from this strong bull spike in a possible new bull trend. There was a one-bar pause at bar 26, which set up a good high 1 long.

There was another six-bar spike up to bar 30 and then a six-bar pullback to the moving average at bar 31, where there was a bull signal bar and another valid high 1 buy setup.

📊 Figure 17.3

Figure 17.3 presents a chart of a difficult day to count (but fairly easy to trade) that shows many subtleties in counting the legs of pullbacks. When the first leg is steep and its correction is only a couple of bars long (like to the bar 2 pause), and then a high 2 setup forms, again after only a bar or two (like at bar 3), no significant trend line will be broken, so you should not be looking to buy a high 2. There is too much risk that this is a bear trend and not a trading range or a pullback in a bull trend, and therefore you should not be looking for high 1s and 2s.

Even though there have been two attempts to go up, the first attempt was too weak. You always want a show of strength before your buy setup. Otherwise, assume that the market is still in its first leg down. If the bar after bar 3 were to go above the bar 3 high, it would be an aggressive long entry, but the buy is always better if the rally after the first leg down (the high 1) shows more strength.

The market sometimes drops again and forms a high 3 after penetrating a trend channel line and reversing up. This is a wedge reversal (three legs and a failed breakout of a trend channel line) and one set up at bar 4. Note that neither bar 2 nor bar 3 went above their prior bars but they each effectively ended a small leg down. On a 1 minute chart, there was almost certainly a clear leg and small corrective rally that formed these 5 minute bull trend bars.

Bar 4 was a high 3 long entry bar, but it was also a bear trend bar. Since it was only the second bar of the up leg and the rally after a wedge bottom usually has at least two legs up, it was not a good low 1 short setup. Remember, all of these reversal attempts are more reliable when they follow a break of a longer and stronger trend line. If no meaningful trend line is broken on the prior leg (like the bar 2 reversal attempt), then the next leg’s reversal attempt will not have much conviction (bar 3), and you should wait for additional price action like the wedge bottom at bar 4 before considering buying.

Bar 5 can be viewed as a low 1 or as a low 2, but when the market is correcting up from a climax bottom (a wedge is a type of climax), make sure to allow it to correct sideways to up before looking to short again. There is no strict rule about what constitutes an adequate correction, but in general the correction should have two clear legs and have at least about half as many bars as the wedge. The sell-off was also a spike and channel bear trend, so the leg up should test close to the start of the channel at bar 2.

Bar 6, strictly speaking, was a low 2, but since there was no meaningful bull trend line break at the low 1, you would not be shorting it. The market was still in a tight channel, so you should not be looking for a low 1 or low 2 short. Channels can have many pullbacks as the channel progresses, but they usually have at least three legs before there is a breakout and a reversal. Bar 7 was the third push up. It was a second-entry short on the moving average test, it formed a double top with the bar 2 top of the channel, and it was the first bar of a two-bar reversal. Shorting below the bear bar that followed was a reasonable trade. However, the market had been in a tight trading range since bar 6 so most traders should not have been trading; instead, they should have waited for the breakout and then begun to look for trades.

Bar 8 was a high 1, but it occurred after six sideways bars at the top of a weak rally and not in a strong bull spike.

Bar 10 was also a high 2 entry above a bull bar at the bottom of a trading range, and an acceptable long entry.

Although bar 11 was a high 1 variant because it did not extend above the prior bar, it was also a low 2 short setup below the moving average. The low 1 setup was the 2 bar reversal from two bars earlier, and that also set up a failed high 2 (bar 10 was the high 2 entry bar). It was the second attempt to create a failure of the bar 10 high 2 long, and most traders who bought above bar 10 would exit on this second failure. This is one of the reasons why a low 2 short below the moving average works. It is exactly where premature longs will exit, and as they sell out of their longs, they add to the selling pressure and they will not buy again for at least a bar or two.

Bar 12 was a bull reversal bar and a high 2 (bar 11 was the high 1) in a quiet day and it was the new low of the day, making it a high-probability trade for at least a scalp. If there was no high 1, the move down would have had about six trending bear bars and traders would have to wait for a breakout pullback (a second entry) before considering a long trade. Bar 12 was the end of a measured move (approximately) in a larger two-legged pullback, with the first leg ending at bar 10, and the end of an even larger measured move from the high of the day with a first leg ending at bar 4. Finally, bar 12 was a reversal up from a bear trend channel overshoot. The line is not shown, but it is anchored on the low of the bar before bar 10 and was created as a parallel of the bear trend line down from bar 7.

Bar 13 could have been the start of a tight trading range because it was the third consecutive small doji. By two bars later, the tight trading range was clear, so most traders should no longer have been using bar counts for setups. However, experienced traders could view bar 13 as a push down, and the two bear bars over the next four bars as two more pushes down; they could then view this tight trading range as a wedge bull flag (discussed in Chapter 18) and then look to buy the breakout, expecting a bull channel after the strong bar 12 bull spike. Since at this point the day was basically in a trading range and this tight trading range was in the middle of the day’s range, bar counting was unreliable. However, since there had just been a strong spike up, it was reasonable to look to buy above a bull trend bar, regardless of what the bar count was.

Bar 14 was a low 2, ending the second leg up, with the spike up from bar 12 being the first leg up. It was also a double top bear flag with bar 7 and therefore the second failed attempt to run to the high of the day. On a trendless day and after a double top bear flag, you should look for two legs down. The first leg ended with the bar 15 high 1, which was followed by two small legs up, ending with the bar 16 low 2 at the moving average.

The second leg down ended with the high 2 at bar 17, but bar 17 was a bear trend bar following a bear trend bar, and it followed a first leg down to bar 15 that was very strong. It was still a valid buy but the uncertainty resulted in a second-chance entry at the bar 18 high 2. This second entry developed because enough traders were sufficiently uncomfortable with the first entry to make them wait for a second setup. It was also an ii pattern variant based on bodies only. In later chapters, you will learn that it is also a double bottom pullback long setup. Bar 17 formed a double bottom with either the bar before or the bar after bar 15, and the sideways bar before bar 18 was the pullback.

The low 2 at bar 19 was after strong upward momentum, but it was still a valid short. However, it resulted in a five-tick failure at bar 20 (described later; it means that the move down from bar 19 reached only five ticks and therefore left many shorts still trapped without a scalper’s profit).

Bar 20 formed a failed low 2, which trapped shorts and was therefore a good entry, especially when the upward momentum had been strong. When a failed low 2 occurs, it is usually followed by either a low 3 wedge or a low 4. It was also a high 2 above the moving average and within a trading range, but the market was in the channel phase of a bull spike and channel trend, and therefore it was a with-trend buy setup, even though it was still below the top of the trading range. Spike and channel trends are discussed in Chapter 21 in book 1 on trends.

Since the bull spike up from bar 20 was so strong, at least two more legs up were likely, and buying the high 1 at bar 21 was a reliable trade. It was possible for this leg down to evolve into a two-legged pullback having a bar with a low below the low of bar 21 (forming a high 2 buy setup), but the odds were against it. There was simply too much strength.

📊 Figure 17.4

On the left in Figure 17.4 is the 5 minute Emini and on the right is the 5 minute SDS, an exchange-traded fund (ETF) that is the inverse of the SPY (an ETF that is comparable to the Emini) but has twice the leverage. On the Emini chart, there was a high 2 at bar 5 following a bull trend line break at bar 1 and then a higher high at bar 3 that tested the old trend high. This was a possible trend reversal. The downward momentum was strong and the high 1 at bar 4 was weak. It poked above the small bull micro trend line from the bar 3 high and immediately reversed down, indicating that the bulls were weak, not strong. It would have been unwise to buy the high 2 at bar 5 unless it showed exceptional strength, like having a strong bull reversal signal bar and not having a two-bar bear spike just before it. Also, the signal bar was too large, forcing a trader to buy high in a weak market, and the signal bar was a doji bar that was almost entirely within the prior two bars (both were bear trend bars).

When there are three or more bars with a lot of overlap and one or more is a doji, it is best to wait for more price action before initiating a trade. The bulls and the bears are in balance and any breakout will likely fail (like the high 2 buy signal at bar 5), and you certainly shouldn’t be buying a breakout above its high, in particular in a bear leg, especially since most trading ranges are with the trend and the prior leg was down.

Whenever you are wondering if a signal is strong enough, it is helpful to study the chart from different perspectives, like using a bar chart or an inverse chart. In general, just the fact that you feel that you need further study should tell you that it is not a clear and strong signal and therefore you should not take the trade.

Even if you were tempted to buy the high 2 on the Emini chart, virtually no one would be looking to sell the bar 5 low 2 on the SDS chart on the right, because the upward momentum was so strong. Since these charts are essentially just the inverse of one another, if you would not buy on the SDS, you should not sell on the Emini.

Note that bar 7 on the Emini was a high 4, which is usually a reliable buy signal. However, in the absence of any bullish strength in the high 1, 2, or 3, you should not take the trade. A bar count alone is not sufficient. You need prior strength in the form of a relatively strong move that broke at least a minor trend line. This is an example of a high 4 that was formed by a spike down and then a wedge channel (bars 4, 5, and 7 ended the three pushes down).

Notice that earlier there was a strong bull trend and that low 2 shorts were bad trades until after the market broke the bull trend line. There was not a strong downward surge, but the market went sideways for about 10 bars, indicating that the bears were strong enough to hold the bulls at bay for a protracted period. This show of strength by the bears was necessary for a trader to feel confident to short the final flag breakout to the bar 3 new high of the day.

Bar 4 was an acceptable micro trend line short on the Emini chart even though the day had been a bull trend day. After the final flag to the higher high at bar 3, you needed to consider that the trend might have switched to down. There should have been at least two bear legs after this type of reversal—both the bulls and bears would be expecting it. Also, the entry was above the moving average, which is what you want to see when selling below a low 1 signal bar.

Once the market appeared to be in a bear trend and the momentum down was good, you could short a high 1, 2, 3, and 4 by placing a limit order at or a few ticks above the high of the prior bar. Bars 4, 5, and 6 were examples of entry bars for those shorts, and they were also signal bars for selling more at one tick below their lows.

📊 Figure 17.5

In Figure 17.5 , bar 2 was a failed low 2, so one or two more legs up were to be expected. Even though the breakout above bar 2 was not strong, the channel up was too tight to short the low 3. A low 4 ended the bear rally and another one ended the sell-off to the low of the day. It does not matter that the bar A high 1 occurred before the low 4 of the prior leg.

Bar 1 was a micro trend line low 1 short that was good for a scalp. However, the small doji at 8:00 a.m. PST and the doji signal bar for that low 1 short meant that the market was becoming a possible tight trading range. This made the trade risky and it was probably better not to take the trade.

Bar B is a good example of a low 1 short on a pullback to the moving average after a strong move through the moving average. It is also a micro trend line failed breakout short.

📊 Figure 17.6

Two failed low 4 shorts illustrate important observations, as shown in Figure 17.6 . The low 4 that triggered the short entry at bar 3 had a small doji bar for its setup. When this is the case, always put the stop at two or three ticks above the high of the signal bar because the market often quickly runs one tick above the signal bar to run stops just after you enter your short, as it did here. Look at the inset of the 1 minute chart. The 5 minute signal bar was made up of the five 1 minute bars between the dashed lines, and the entry bar was made up of the five bars between the solid lines. You can see that the market triggered the short in the second minute of the entry bar but then ran above the signal bar by one tick in the fourth minute before selling off down to bar 4.

The second low 4 was triggered by the bar 5 setup. The rally up to bar 4 was almost all bull trend bars, and it followed the bar 4 lower low that formed after breaking a major bear trend line. The trend had changed to a bull trend, and you should no longer have been looking for bear rallies, nor should you have been looking to short low 1s, 2s, 3s, or 4s, which are setups in trading ranges and in bear trends. This is especially true in the absence of bear strength on the move up from bar 4, like a break of the bull trend line. In fact, instead of looking for a reversal to short, you should have been looking for a pullback to buy and you could even have placed a limit order to buy at or below the low of bar 5. Look what happened when the low 4 failed on the bar after entry. As expected, everyone finally accepted the reality that this was a bull market, and the market shot up nonstop to bar 8, which was about a measured move of the height of bar 4 to bar 5, the entire low 4 pattern. The breakout created a measuring gap between the high of the breakout point (the bar 5 high) and the breakout pullback (bar 7). This type of measuring gap is discussed in Chapter 6 on gaps.

Notice that bar 7 was the first of three attempts to reverse back down, and therefore it was a magnet for any pullback from any additional rally. It was the start of the bull channel after the two-bar breakout spike above the failed low 4. The two-legged move down to bar 11 (following the bull trend line break and the bar 10 lower high) hit below the lows of all three of those earlier bear reversal bars, as is commonly the case. In the face of such a strong rally, it is hard to believe that the market could have come back down to those levels, but if you know how to read price action, you would have been more surprised if it did not, especially after such a climactic move up. Bar 7 was followed by a tight trading range, but this was in a strong bull market. Although the tight trading range made bar counting less reliable, since it was a strong bull market, traders should have been looking to buy above bull bars, while placing their protective stops below the low of the signal bar.

Incidentally, bar 7 and the two bear reversal bars that followed in the next four bars constituted three pushes down. When they failed with a breakout made up of two bull trend bars, there was another measuring gap above the wedge that led to a measured move up, and the high of the day exceeded it by a couple of ticks (failed wedges often lead to measured moves).

There was a high 1 buy setup that formed a couple of bars after bar 8, and although it was in a strong bull spike and in a bull trend, it was after a buy climax and therefore not a good buy setup. The market was in a parabolic bull channel after the two-bar bull spike at bar 6.

📊 Figure 17.7

A low 2 setup is not enough reason to take a countertrend trade in the absence of a prior strong trend line break. In fact, it will almost always fail and turn into a great with-trend entry, like a high 2 buy, as happened at bars 4 and 6 in Figure 17.7 . A low 2 is a setup in a trading range or a bear market and never in a bull trend, and this is a bull trend so traders should not be looking for low 2 setups. Before shorting a strong bull trend, you first need the bears to show that they have already been willing to be aggressive. You look to short their second attempt at pushing the market down, not their first, since the first usually fails. When the bull trend is very strong, you can even consider buying below the low of the prior bar, expecting any low 1 or low 2 to fail. For example, you could place a limit order to buy below the reversal bar that formed before bar 2, or you could buy on bar 5 as it fell below the low of the prior bar, expecting the low 2 to fail. In general, it is safer to buy on a stop above the high of the prior bar; but when the bull trend is strong, you can pretty much buy at any time and for any reason, and buying below the low of the prior bar is logical since you have to expect most reversal attempts to fail.

By bar 4, the market was in a tight trading range so bar counting was getting confusing. You should ignore it at this point and, since the bull trend was so strong, just look to buy on a stop above any bull bar, like the bar after bar 4.

📊 Figure 17.8

As shown in Figure 17.8 , today had a gap down breakout and then a breakout pullback to a double top just below the moving average at bar 2, and this was followed by a new low. At this point, traders did not know whether the two legs down to bar 3 ended a move or there was more to come (the first leg was from yesterday’s close down to bar 1). Although the bar 4 low 2 short reached its scalper’s profit target and therefore could not technically be a failure, the break below the trend line and the reversal up made it likely that the market would behave like a failed low 2; it would have at least two more legs up and then attempt to form a low 4 bear setup.

There were a couple of problems with the low 2 short at bar 4. First, it followed a trend line break (the rally up to bar 2), which meant that bar 3 could be the low of the day (a bad place to be shorting) since the high or low of the day usually develops in the first hour or so. Next, the low 2 was too far from the moving average and therefore not a good moving average test. Normally, second tests of the moving average are closer to the moving average or penetrate it more than the first, and the first test at bar 2 was clearly closer. Many traders won’t feel comfortable entering with the trend unless the pullback touches or comes within a tick or so of the moving average. When the reversal begins before this happens, it will be missing the fuel that those shorts would have provided.

Bar 6 formed a low 4 setup and was the second push above the moving average. However, this rally had many overlapping bars and several dojis, indicating that the bulls and the bears were fairly balanced and a big, fast move down was unlikely. Therefore, trading at this point might not be worthwhile for traders who prefer high-probability trades with big profit potential. The solution? Either wait for more price action, knowing that good setups will always come if you can be patient, or take the short but be prepared to allow for a pullback, like the one on the bar after entry.

Bar 9 was the fifth consecutive overlapping bar, and at this point the market was in a tight trading range. Bar counting in a tight trading range is too uncertain, and most traders should not be taking trades on that basis until after a breakout.

📊 Figure 17.9

A failed low 2 can lead to either a wedge top (a low 3) or a low 4 top, depending on the momentum up from the failed low 2. Sometimes it can just turn into a bull trend. The breakout above the failed low 2 in Figure 17.9 was by two bull trend bars with large bodies and small tails, and the move up from bar 3 was in a tight channel. It was also a channel that followed the very strong spike from the open up to bar 1. Also, the low 2 reversed up after just a single bar. This strong bull momentum made shorting below the bar 5 ii pattern too risky. It was reasonable to expect this low 2 to fail since it was in the early stages of a bull channel, and channels often have pullbacks that trap traders in the wrong direction. The strength of the bulls was good up to this point, as seen by the tightness of the channel, the number of bull trend bars, and the lack of much overlap between adjacent bars. These are signs of a solid bull channel, and therefore a low 2 should be expected to fail.

Even though the market did not trade below bar 5 to trigger the low 3, it was still the third push up from bar 2 so it served the same purpose as a low 3. Since the momentum on the breakout was strong, two more legs up should be expected. The bar before bar 6 poked slightly above the trend channel line and had a bear close, and bar 6 tested the line again. This was a reasonable low 4 short setup for at least two legs down.

Later in the day, a high 2 failed but turned up after a high 3 (a form of wedge) instead of a high 4. The moves up from the high 1 and high 2 each lasted several bars, indicating some strength by the bulls. Although the breakout below the failed high 2 was strong, it was an exhaustive sell climax. The increasing size of the bodies of the bars in the bear spike was a sign of exhaustion, and it occurred at the trend channel line and in the area of the bar 2 low. Since bar 2 was the start of a bull channel, it was a magnet that should be expected to be tested, as it was here. After the test, the market usually rallies to at least about 25 percent of the height of the developing trading range. Since the three-bar bear spike down to bar 9 represented strong bearish momentum, there was a possibility of at least one more leg down. Because of the sell climax, the odds favored at least two legs sideways to up. This made buying the bar 10 higher low a good probability trade, especially since the odds favored an attempt at a trading range after the test of the bar 2 bottom of the bull channel.

Deeper Discussion of This Chart Today, as shown in Figure 17.9 , opened with a failed breakout, reversing up after the gap down breakout. There was a strong bull trend bar spike and then a tight channel up to bar 1; the entire move was likely a bull spike on a higher time frame chart. When the momentum is strong like this, the odds favor at least a second leg up after a pullback, and that made it reasonable to look for buy setups once the market pulled back to the area of the bar 2 start of the bull channel. This was also a trend from the open bull day, and bar 2 was the setup for the first pullback long. Bar 3 was a breakout pullback buy setup from the breakout of the bull flag from bar 1 to bar 2. Traders saw the entire leg down from bar 6 as likely a pullback in a bull trend. The high 2 was close enough for that bottom but traders were not sure. In any case, they were looking to buy. Also notice that every new low down from the bar 6 high quickly reversed. Traders were buying the new lows, so buyers were active all the way down. Although the move down from the failed high 2 was strong, it was three bear bars of increasing size and was a small sell climax. A trader could buy above bar 9 and assume that the bar 9 low would hold (the wedge low), but it was better to wait for a pullback, which came with the bar 10 higher low. This led to a strong rally into the close as the bulls from the open resumed their buying.

📊 Figure 17.10

In Figure 17.10 , the bar 16 doji had a large tail on the top, which indicates that the market moved up and down within that bar. That up move was the end of the first leg down, and therefore bar 17 should act like a high 2, which it did.

Bar 12 was a low 2 short setup below the moving average, but the market was beginning to form a trading range and therefore this was not a reliable short. In fact, it made more sense to buy at the bar 12 low, but this is something that only experienced traders should attempt. Whenever there is a sell signal just below the moving average and the signal bar is large and mostly overlaps two or more bars, the market is in a small trading range and shorting at the bottom is usually a losing strategy.

Deeper Discussion of This Chart The day opened with a large gap down in Figure 17.10 and was therefore a bear breakout. Although bar 1 was a bear trend bar, it could still be the first bar of a trend from the open bull trend day, although this is less likely than if it had been a bull trend bar. Traders bought above the high of bar 1 for the failed breakout rally. The rally went for only two bars and then the bears shorted below the second bull bar and below the two-bar reversal (the low of that bear entry bar) for the breakout pullback short and a possible trend from the open bear day. A large gap down has an increased chance of being a bear trend day, and traders should try to take all reasonable short setups for a swing down. Bar 4 was the third push down on the day, but it was the third bar of a bear spike and therefore not a reliable signal bar for a long. Traders should wait for a breakout and then a pullback before going long. The next bar was a bull trend bar that traded above bar 4 and formed a two-bar reversal, but the market did not trade above the top of the two bars; it instead broke out to the downside. The three bear bars before bar 2 had enough momentum so that many traders would restart the count and would consider bar 2 to be the first push down. When bar 4 formed, some traders saw it as the third push down whereas others saw it as only the second, and no one knew which group of traders would be correct. When in doubt, stay out and wait for a second signal. Bar 5 was a bull reversal bar and the second bar of a two-bar reversal; it was also the third push down in the channel that began with the bar 2 bear spike. The spike is often the first push, as it was here. At this point, the spike and channel bulls bought, expecting two pushes up, and the wedge traders who reset the count with the bar 2 spike also bought this third push down. The traders who wondered if bar 4 was the third push were looking for a breakout pullback and saw bar 5 as a lower low breakout pullback. All traders at this point believed that all of these factors were at play and the odds were good for a two-legged rally. Bar 5 was followed by a four-bar bull spike up to the moving average, and this might have been the end of the first leg up. Bar 6 was a setup for a low 2 short but since a second leg up was likely, it was better not to take a short scalp and instead look for a lower high long setup or a breakout of this bull flag. Bar 6 and two bars before it were bear bars forming two small legs down; they therefore set up a high 2 buy above the high of bar 6. Bar 8 was a small doji, but it might have been a setup for a final flag short for a failed breakout of that four-bar bull flag that ended with bar 6. However, the move up to bar 8 from bar 5 was in a fairly tight bull channel, and therefore it was unclear if bar 8 was the second leg up. When in doubt, wait for a second signal. The bar after bar 8 was a bear trend bar, which was a good entry bar for the bears who shorted, but they would buy back their shorts above the bear trend bar. Many traders went long above bar 6 since there were trapped bears and this was also now a failed low 2, where bar 6 was the first push down. Bar 9 was a bear reversal bar, a second-signal moving average gap bar where bar 8 was the first setup, and the top of a bear wedge. The top of the spike up from bar 5 was the first push up, and bar 8 was the second. A wedge reversal usually has at least two legs down, and it did here. The first ended at bar 11 and the second at bar 17. The bulls who were looking for two legs up from the wedge bottom at bar 5 were satisfied that the spike up from bar 5 was the first leg up and the channel up from the bottom of bar 6 was the second leg up. The three bars after bar 10 tried to form a double bottom with the bar 7 bottom of the bull channel but failed. Bar 10 was a bear spike, and it was followed by a climax channel down to bar 11. Bar 11 was a doji bar but it followed a sharp move down from bar 9, and the market was likely to go sideways before reversing up because of that bear momentum. Bar 12 was a low 2 short, but it was a large signal bar and there was a lot of overlap with the three prior bars; therefore this was likely to be a bear trap and not a good short setup. The failed low 2 led to a six-bar bull spike up to bar 14, but there was a lot of overlap between adjacent bars, and the move up was in a very tight channel. Even though the channel sloped up, its tightness increased the chances that any downside breakout would not go very far and the market would get pulled back up into the area of the channel. This was therefore a possible final flag, and that could lead to a bull reversal. The market spiked down to bar 17, and bar 17 was a large bear trend bar and therefore a sell climax. The bull inside bar that followed was a good setup for at least a two-legged rally based on the final flag reversal, the third push down on the day (this created a large wedge bull flag with bar 5 and bar 11), and the second lower low attempt to reverse up from breaking below the bar 5 low of the open. Bar 17 was also a shrinking stair since it fell below bar 11 by two ticks and bar 11 fell below bar 5 by six ticks. This is a sign that the bear trend was losing momentum. Bar 19 was a low 2 setup, but the upward momentum was too strong and the signal bar too weak to take a short. The entry bar was a strong bear trend bar, but the market immediately reversed up. Alert traders would have expected the low 2 to fail, and they went long above this bear entry bar. Bar 20 was the third push up from the bar 17 low and a strong bear trend bar but the short never triggered. The market had one more push up to bar 21, and the reversal down was seen by some traders as a low 4, and by other traders as a wedge top with bar 18 being the first push and bar 19 being the second. Other traders saw it as a large low 2 where bar 14 was the first push up.

📊 Figure 17.11

In Figure 17.11 , bars 3 and 4 created a two-legged correction in a bull swing, even though the bar after bar 3 was the end of the up leg. Because it was a two-legged correction, bar 4 is a high 2 long signal bar.

Bar 7 was a bear trend bar so it was not a reliable high 1 signal bar, but bar 8 formed a two-bar reversal with it and the chances of a successful trade were greater if you bought above the bar 8 bull trend bar than if you bought above the bar 7 bear trend bar. Although some traders saw bar 7 as a low 2 entry after the bar 3 first leg up, the move up was so strong that this may have been a bull trend; therefore, shorting a low 2 was a low-probability trade.

Bar 8 was a failed low 2 buy setup and a high 1 long.

Some traders would have shorted below bar 9, but the bull channel was too steep and the signal bar too weak to be taking shorts at this point.

Bar 10 was a high 2 long (bar 8 was the high 1) because it followed two attempts to sell off at the high of the day (bars 7 and 10). A sequence of two attempts down is the same as a two-legged correction, so it was a high 2 long setup. It was also a failed low 2 buy setup and there were likely trapped bears who bought back their shorts above bar 10. Also, some of the shorts from the bar 8 signal would have allowed one push up, but almost all would have covered on a second push up. That is one of the reasons that high 2 buy setups are so reliable in bull trends.

Some traders saw bar 12 as a high 1 buy setup whereas others saw it as a high 2 buy setup where the doji bar before it signified the end of the first small push down. Since the move up to bar 11 was a wedge channel, it was likely to have a two-legged sideways to down correction, so buying here was not a high-probability trade. Bar 12 broke the bull trend line and could have been followed by a lower high or a higher high; in either case, bears would likely have looked to short the rally for at least a scalp down.

All of this analysis is loose, but its objective is important. Traders need to look for two-legged pullbacks because they set up excellent with-trend entries. Also, do not look for a low 2 short setup in a bull trend.

📊 Figure 17.12

The chart of the SPY presented in Figure 17.12 demonstrates lots of variations in low 2 setups, but if you think about each one, each was the logical end of a two-legged bear correction. Since the chart is clearly bearish (below the falling exponential moving average), traders were looking for opportunities to enter shorts, so anything that resembled a low 2 was good enough.

Bar 3 was a low 1 and its high was taken out by bar 4, making bar 4 a second attempt up and a setup for the low 2 short that triggered on the next bar.

Bar 6 was a low 1 setup, and two bars later there was a bull trend bar, indicating an up leg. Bar 7 was the signal bar for the short on the following bar, even though it was a lower entry than the low 1. It was still a two-legged correction.

Bar 8 was a small bear inside bar in an upward correction, and it therefore constituted a tiny correction, ending the first leg up. Bar 9 followed another bull trend bar (actually two), so it was the second attempt down and effectively a low 2 short near the moving average.

Bar 11 was lower than bar 10, so it was the start of the move up to bar 12. Why was the bar after the bar 12 top a low 2? The low of the bar 12 bull outside bar dipped below the prior bar just after bar 12 opened, although you cannot tell from this chart, but you can tell for certain by looking at a 1 minute chart (not shown). This made bar 12 a low 1. An outside bar breaks out of both sides of its prior bar; you do not know which side it broke through first, although the direction of its body is usually reliable (for example, a bull body usually indicates that the upside breakout occurred second, since its direction is up into its close). The bar after bar 12 broke below bar 12, so it was the second time in this leg up from bar 11 that a bar broke below the low of the prior bar and was therefore a low 2 short at the moving average. Bar 12 was also a low 2 short setup because bar 9 was a first move up and bar 12 was a second move up.

Bar 13 was a low 1 short entry bar (and a low 2 where the bear bar three bars earlier was the low 1), but after two strong bull trend bars, this was too risky to take since more of an upward correction was likely.

Once there was a second leg up (bar 14 had a higher high, so it was clearly a small second leg), any bar that had a low below the prior bar was a low 2 short. Bar 15 turned into a low 2 short signal bar even though it was a small swing high that was below the high of the two legs up (it was a lower high in what should be expected to be at least two legs down). Also, as discussed in the next chapter, bar 15 was also a wedge bear flag entry based on three pushes up where bar 14 was the third push up and the two bull trend bars before bar 13 were the first two pushes up.

Bar 17 was a low 2 setup but it followed two bull reversal bars with large tails so traders were beginning to buy in this area. This made shorting here risky, and it was likely that there would be more buyers below the bar than sellers. The more certain you are that the market is in a tight trading range, the less certain you will be about your bar counting. In general, it is better not to take trades based on bar counts in tight trading ranges unless you are very confident with your count, which means that you believe that the count is clear enough to warrant a trade.

Bar 18 was a double bottom with bar 16 and a high 2 based on the two small pushes down from bar 17.

Deeper Discussion of This Chart As shown in Figure 17.12 , the day had a large gap down and was therefore a bear breakout. The first bar was a bear trend bar and a possible high of the day; consequently, it was an acceptable short setup. However, the market reversed up into a failed breakout long setup on the next bar, and the day could have become a trend from the open bull trend day. The large gap down still favored the bears unless the bulls clearly took control of the market with a strong bull spike and follow-through. Once the market traded below bar 2, the market then had both a spike down and a spike up after the first bar of the day, and the day’s range was less than a third of the recent average daily range. This put the opening range in breakout mode for a possible trend day, and traders placed buy stops above the high of the day to go long on the upside breakout, and sell stops to go short below the bar 1 low spike for a downside breakout. The large bear trend bar that broke below bar 1 shows how aggressively the traders shorted. The sell-off was probably attributed to a 7:00 a.m. PST report. However, it is more likely that the institutions were already planning to short today and very unlikely that they were flooded with phone calls from their large clients who heard the bearish report and now suddenly decided to sell. The institutions were already looking to short but were hoping for a rally on the report so that they could short higher. The report convinced them that they were not going to get that rally so they had to short after the report, and they continued to short all day long. Bar 18 was the end of a bear trend bar breakout of a tight trading range and likely to reverse up because of the magnetic pull of tight trading ranges, which often become final flags. Bar 19 was the first moving average gap bar in a bear trend and therefore a good short. It is a good example of a bear trap that often occurs in the final hour or two of a bear trend day. It was at the top of a strong bull spike that broke above the bar 17 swing high and trapped bulls in and bears out. All bull spikes are climaxes and breakouts, and they sometimes fail and lead to reversals down instead of reversals up. At the time the spike was forming, emotional traders who were afraid that they were missing a major reversal bought as that second bull trend bar formed, as it broke above the bar 17 lower high, and as the bar closed on its high. Strong bears were simply stepping aside and letting the bulls go. These bears knew that the odds were high that there would be an attempted bull reversal before the day was over, and they waited for a strong bull trend bar to form. Once they saw it, they believed that the market would not hold up there very long, so they aggressively shorted. Since both they and the bulls knew that the bears controlled the day, the bears were confident of being able to again drive the market to a new low of the day. The bulls scalped out of their longs because they did not believe that the reversal up had enough of the ingredients of a strong bull reversal. There was no prior strong break of the bear trend line, and the market was unable to hold above the moving average at any point in the day.

📊 Figure 17.13

When there is a spike and channel pullback, the spike can be thought of as the first leg up and the channel as the second. In Figure 17.13 , the gap opening up to bar 2 was the spike, which was the first of three pushes up. Bull channels often have two more pushes up before correcting, and the entire pattern formed a wedge top in this chart. Most patterns have multiple interpretations, and some traders base their trades on one whereas other traders rely more on another. The move up to bar 4 was seen by some traders as a wedge top and by others as a two-legged correction where the gap spike up to bar 2 was the first leg and the two-legged channel up to bar 4 was the second leg.

2. 分形市场与条形计数的理论基础

2.1 市场的分形自相似性

Brooks 开篇即指出市场是分形的。这是一个来自数学的概念，意味着市场的每个片段在所有时间周期上都有着相同的模式。这个观察是 Bar Counting 能够成立的底层前提——既然所有时间周期的行为模式相同，那么在一张 5 分钟图上有效的计数规则，在日线图上同样有效。

分形自相似性有几个重要推论：

• 模式可迁移性：在 1 分钟图上学会识别 High 2 后，在 60 分钟图上也能识别同一种模式
• 时间周期无关：不需要为不同时间周期建立不同的规则体系
• 结构嵌套：大级别的一次两腿回撤内部可能包含更小级别的 4-6 条腿
• 适用性广泛：从日内交易的 E-mini 期货到长期持仓的股票月线图，规则完全一致

2.2 两腿运动的普适性

Brooks 强调：所有的运动都会倾向于形成两条腿，所有的回调也倾向于形成两条腿，所有回调的回调也倾向于形成两条腿。这个层叠式两腿结构意味着”两腿”是市场行为最基本的单位。

为什么会这样？从行为金融学的角度：

• 第一腿代表了新的信息冲击。多头或空头中的一方获得了优势，推动价格向一个方向运动
• 第二腿代表了市场的确认。第一腿运动后的回调吸引逆势交易者参与，当他们被击败后，趋势方向上的第二腿运动确认了原方向的有效性

如果第一腿后就继续原方向运动，说明趋势极强；如果出现第三腿（三推），则说明趋势动能减弱，耗尽的概率增加。

2.3 可量化的信号：当前高点突破前高

Bar Counting 的核心信号定义是：当一条柱线的高点突破前一条柱线的高点时，标记为 High 1。这个定义看似简单，但其实非常精巧：

第一，它不要求涨幅多大。只要突破一个 tick（最小价格变动单位）即可，因为在一个 tick 的市场中，任何一个 tick 的突破都代表了买方力量的胜出。

第二，它要求是在回调过程中的突破。在直线上涨中的连续创新高不视为独立的 Bar Counting 信号——它们只是趋势延续的自然表达。

第三，在两个信号之间需要有一个”微小的趋势线突破”（tiny trend line break）。Brooks 强调，在 High 1 和 High 2 之间必须有至少一次趋势线的小幅突破，以证明趋势交易者仍然活跃。如果没有这个突破，High 1 和 High 2 更可能只是一个更大的下行通道的组成部分。

3. High 1 / Low 1 模式详解

3.1 High 1 的定义与识别

High 1 是在一个下跌或横盘运动中，第一条高点突破前条柱线高点的柱线。它在下跌趋势或回调中代表了买方的第一次反攻尝试。

识别条件：

• 市场处于下行或横盘状态（在上升趋势中不会出现 High 1——因为每根柱线都在创新高）
• 当前柱线高点 > 前一根柱线高点
• 这是在当前下行/横盘段中第一次出现此情况

市场含义：买方第一次尝试推高价格。在强下跌趋势中，High 1 往往失败（被后续的卖压吞没）。在弱下跌趋势或回调中，High 1 可能是回调的终点。

3.2 Low 1 的定义与识别

Low 1 是在一个上涨或横盘运动中，第一条低点跌破前条柱线低点的柱线。

识别条件：

• 市场处于上行或横盘状态
• 当前柱线低点 < 前一根柱线低点
• 这是在当前上行/横盘段中第一次出现此情况

市场含义：卖方第一次尝试压低价格。在强上升趋势中，Low 1 往往失败。在弱上升趋势或交易区间中，Low 1 可能成为做空信号。

3.3 弱信号与强信号

High 1 和 Low 1 在特定条件下可以是强信号：

作为趋势中的信号：

• 在强趋势中，High 1 通常是失败的（下跌趋势中短暂的反弹后继续下跌）
• 在弱/末期趋势中，High 1 可能成功（趋势动能耗尽）

作为交易区间中的信号：

• 在交易区间的底部附近，High 1 可能是做多的好机会
• 在交易区间的顶部附近，Low 1 可能是做空的好机会

3.4 High 1 在熊市趋势中的应用

在清晰的熊市趋势中，High 1 通常表现为反弹的高点。经验丰富的交易者使用以下策略：

• 观察 High 1 是否形成双顶/楔形顶/头肩顶等反转形态
• 如果 High 1 后的柱线无法维持在上涨状态，在回落后做空
• 止损放在 High 1 高点之上一个 tick

4. High 2 / Low 2 模式详解

4.1 High 2 的定义与识别

High 2 是当前下行/横盘段中第二次出现的高点突破信号。High 2 是最重要的 Bar Counting 模式之一，因为它是 Brooks 认为最可靠的入场时机之一。

识别条件：

• 已经出现过一个 High 1
• 在 High 1 之后，市场再次下跌或横盘
• 出现新的柱线，其高点 > 前一根柱线高点
• 在 High 1 和 High 2 之间至少有一次微小的趋势线突破

市场含义：买方在第二次尝试中推高价格。如果第二次尝试成功（High 2 后出现连续的上涨柱线），则确认了回调结束，趋势恢复。

4.2 Low 2 的定义与识别

Low 2 是当前上行/横盘段中第二次出现的低点跌破信号。

识别条件：

• 已经出现过一个 Low 1
• 在 Low 1 之后，市场上行或横盘
• 出现新的柱线，其低点 < 前一根柱线低点
• Low 1 和 Low 2 之间有微小的趋势线突破

市场含义：卖方在第二次尝试中压低价格。

4.3 趋势中的 High 2 vs 交易区间中的 High 2

这是本章最重要的区分之一。

在上升趋势中的 High 2（买入时机）：

• 通常发生在均线上方或附近
• 趋势足够强，你可以在当日高点附近买入
• 这是趋势延续模式，你在”追高”买入——但因为是趋势，追高是合理的
• 止损：放在 High 2 低点之下一个 tick 或均线下方
• 目标：至少有双倍于回调的涨幅

在交易区间中的 High 2（区间反弹）：

• 通常发生在均线下方或区间中下部
• 你是在”抄底”——因为区间没有趋势
• 在均线下方很远出现 High 2 是好事（跌得太快需要反弹）
• 在接近均线时出现 High 2 则不好（可能只是均线的压制）
• 止损：放在区间低点下方
• 目标：至少到区间高点

关键区别： | 特征 | 趋势中的 High 2 | 交易区间中的 High 2 | |——|—————-|———————| | 位置 | 均线上方或附近 | 均线下方 | | 性质 | 趋势延续 | 区间反弹 | | 入场 | 追高买入 | 抄底买入 | | 目标 | 新高或双倍回调 | 区间高点 | | 风险 | 趋势反转 | 区间突破失败 |

4.4 ABC 回调与 High 2 / Low 2 的等价关系

ABC 回调是另一种描述方式：

• A 腿：回调的第一段运动（对于买入信号，A 腿是下跌）
• B 腿：折返运动，形成 High 1 / Low 1 入场信号
• C 腿：回调的第二段运动，追随 A 腿的方向

完整的 ABC 结构结束后，从 C 腿突破的信号就是 High 2（买入） 或 Low 2（卖出）。

ABC 结构的有效性取决于各腿之间的关系：

• A 腿和 C 腿的长度应该大致相等（非对称性在 ±30% 以内）
• B 腿通常回撤 A 腿的 40-62%
• C 腿结束时，信号柱线的形态应该较强（实心柱线、突破幅度较大）
• 如果 C 腿远超 A 腿的长度，说明原趋势的对手方更强，ABC 结构可能失败

5. High 3 / Low 3 模式详解

5.1 High 3 的定义与含义

High 3 是下行/横盘段中第三次出现的高点突破信号。

出现条件：

• 市场已经出现 High 1 和 High 2
• High 2 失败（市场继续下跌）
• 第三次出现高点突破信号

市场含义：High 3 是”最后一次尝试”。当 High 1 和 High 2 都失败后，市场实际上已经进入了深度回调状态。High 3 代表了买方在非常不利条件下的最后一次推高尝试。

5.2 Low 3 的定义与含义

Low 3 是上行/横盘段中第三次出现的低点跌破信号。

出现条件：

• 市场已经出现 Low 1 和 Low 2
• Low 2 失败
• 第三次出现低点跌破信号

市场含义：Low 3 同样被视为”最后一次尝试”。在连续两次卖压释放后的第三次尝试如果成功，意味着趋势可能已经耗尽，反转概率很高。

5.3 High 3 / Low 3 的交易策略

High 3 和 Low 3 的交易策略应该与 High 2 / Low 2 有所不同：

原因：三次出现相同方向的信号意味着原趋势方向非常弱。如果原趋势强势，第一次信号就应该成功。

策略调整：

• 方向性仓位规模减半（连续三次失败意味着不确定性大幅增加）
• 止损收窄（市场可能随时反转）
• 准备反向操作（如果 High 3 失败，意味着卖方仍然控制市场；如果 Low 3 失败，意味着买方仍然控制市场）
• 关注可能的双底/双顶/三推反转形态

5.4 High 3 在交易区间中的应用

在交易区间中，High 3 有其特殊用途：

区间底部附近的 High 3：如果在区间支撑位附近产生 High 3，这是一个强烈的区间反弹信号。市场在区间下沿三次测试支撑后终于反弹，这种反弹往往力度较大。

区间顶部的 High 3：如果在压力位附近的 High 3 失败（不能持续上涨），则说明区间压力有效，是反向做空的机会。

6. High 4 / Low 4 模式详解

6.1 High 4 的定义

High 4 是市场中第四次出现的高点突破信号。

特性：在流动性市场（如 E-mini）中，High 4 出现的概率较低。一旦出现 High 4，这通常意味着市场进入了深度交易区间的后期阶段，原趋势完全失效。

6.2 High 4 突破交易区间的含义

当出现 High 4 时，市场实际上已经完成了一个复杂的底部形态。四次尝试突破意味着多头非常顽强，也意味着空头力量已经逐步耗尽。

交易含义：

• High 4 的成功突破往往意味着区间已被打破
• 突破方向通常包含较大动能（因为积蓄了四次力量）
• 可以使用突破策略：在确认突破后追入

6.3 Low 4 的定义与含义

Low 4 是市场中第四次出现的低点跌破信号。

特性：与 High 4 对称，Low 4 意味着市场在顶部区域形成了复杂的头部形态，空头四次尝试压低价格。

交易含义：

• Low 4 成功跌破意味着顶部确立
• 跌幅通常较大（四次蓄力）
• 适合使用突破追空策略

6.4 Bar Counting 数字的深层含义

Bar Counting 的数字本身就是信息：

• 1 = 第一次尝试（试探性）
• 2 = 第二次尝试（确认性——最可靠的信号）
• 3 = 第三次尝试（耗尽性——反转概率增加）
• 4 = 第四次尝试（极端——方向突破即将到来）

7. ABC 回调结构深度分析

7.1 ABC 回调的结构要件

ABC 回调是市场中最为常见的三浪结构。它不是一个波浪理论的概念（虽然与 Elliott Wave 有相似之处），而是 Brooks 基于价格行为总结出的可操作结构。

ABC 回调的结构要件：

1. A 腿：明显的方向性运动（可能是下跌，也可能是上涨）
2. B 腿：A 腿的反向运动，通常回撤 A 腿的 40-62%
3. C 腿：追随 A 腿方向的运动，长度通常与 A 腿大致相等

判断标准：

• A 腿应该是清晰的、无歧义的运动
• B 腿的内部应该形成至少一次 Bar Counting 信号（High 1 或 Low 1）
• C 腿的终点就是入场点——High 2 或 Low 2

7.2 完美的 ABC 回调与偏差

完美 ABC：

• A = C（等长）
• B = 50% 回撤
• 时机完美：C 腿结束时，信号柱线强劲

偏差与应对： | 偏差 | 含义 | 应对 | |——|——|——| | C 腿 < A 腿（60%以下） | 原趋势很强 | 正常入场，但止损缩小 | | C 腿 > A 腿（130%以上） | 原趋势很弱 | 暂缓入场，等待更多证据 | | B 腿很浅（<20%） | 趋势极强 | 可在 High 1 / Low 1 就直接入场 | | B 腿很深（>80%） | 趋势可能耗尽 | 小幅仓位，准备反转 | | C 腿有内部两腿子结构 | 回调深度增加 | 从子结构的 High 2 入场更可靠 |

7.3 ABC 失败模式

失败的 ABC（成为新趋势）： 当 C 腿大幅超越 A 腿时，ABC 结构本身可能”失效”——因为它实际上成为了新趋势的第一波。例如，在一个熊市趋势中预期出现 ABC 上涨回调，但 C 腿（假设是反弹方向）远远超出了 A 腿的长度，说明这不是一个简单的回调，而可能是趋势反转。

识别方法：

• C 腿 > A 腿 × 1.5
• C 腿的突破伴随着大成交量
• C 腿形成后没有形成新的反向运动

应对：

• 放弃原方向的交易计划
• 改为跟随 C 腿方向
• 在 C 腿回调后建仓

8. Bar Counting 在不同市场环境中的应用

8.1 强趋势中的 Bar Counting

上升趋势：

• 几乎不会出现 High 1——价格总是在创新高
• 出现 Low 1 时要警惕——这是趋势可能的第一次减速
• Low 2 出现时考虑减仓——趋势可能开始耗尽
• Low 3 出现时清仓——趋势大概率结束

下降趋势：

• 几乎不会出现 Low 1
• High 1 是最主要的潜在反转信号
• High 2 可能是入场做空（如果出现 B 腿反弹）
• 重点关注从 High 2 失败后的下跌延续

8.2 交易区间中的 Bar Counting

区间内的 Bar Counting 是本章的核心应用场景之一。在交易区间中，Bar Counting 帮助交易者回答最关键的问题：价格会到哪里？

区间底部的 Bar Counting：

• High 1、High 2、High 3 都是可能的反弹起点
• High 1 出现在区间下沿附近时是弱反弹信号
• High 2 是最可靠的区间反弹买入信号
• High 3 在区间下沿是强烈的反弹信号

区间顶部的 Bar Counting：

• Low 1、Low 2、Low 3 都是可能的回撤起点
• Low 1 出现在区间上沿时需要谨慎（可能只是假突破）
• Low 2 是最可靠的区间做空信号
• Low 3 在区间顶部附近是强烈的卖出信号

8.3 趋势末期（耗尽阶段）的 Bar Counting

趋势末期，市场在失去动能的同时，Bar Counting 信号会表现出特定的规律：

特征：

• High 1 和 Low 1 开始频繁出现（原方向的柱线不再能持续创新高/新低）
• 信号交替出现（一会儿 High 1，一会儿 Low 1）
• 信号柱线实体变小，影线变长
• 均线走平，价格围绕均线波动

策略：

• 减少仓位规模
• 不要在三推/三次信号后追入
• 转向交易区间策略（高抛低吸）
• 重点关注反转形态（双顶/双底/头肩顶）

9. Spike and Channel 与 Bar Counting 的关系

9.1 Spike 作为第一腿

Brooks 在 Chapter 16 中已经介绍了 Spike and Channel 模式，而本章将它与 Bar Counting 联系起来。Spike 本质上就是第一腿运动（相当于 A 腿），而 Channel 就是第二腿（相当于 B 腿的延伸）。

Spike 阶段的 Bar Counting：

• Spike 中的柱线连续创新高/新低
• 在此阶段不适合使用 Bar Counting（柱线都在单向运动）

Channel 阶段的 Bar Counting：

• Channel 是两腿结构的总和
• Channel 中的折返使用 Bar Counting 来识别入场时机
• Channel 的末端可能包含三推结构（楔形顶/底）

9.2 楔形与 Bar Counting

楔形本质上是三推结构（Three Pushes）。在 Bar Counting 的框架下：

楔形顶（Wedge Top）：

• 前两次推高对应 Low 1 和 Low 2（在推高之间的回撤）
• 第三次推高形成 Low 3 信号
• Low 3 的失败 = 楔形顶完成
• 反转做空的时机在 Low 3 失败后

楔形底（Wedge Bottom）：

• 前两次推低对应 High 1 和 High 2
• 第三次推低形成 High 3 信号
• High 3 的成功（价格开始持续上涨）= 楔形底完成

9.3 头肩形态与 Bar Counting

头肩形态（Head and Shoulders）在 Bar Counting 的框架中也有对应的表达：

头肩顶：

• 左肩：第一次上涨后的 Low 1 信号
• 头部：第二次更大幅度的上涨后的 Low 1（更高级别的 Low 1）
• 右肩：第三次较小幅度的上涨后的 Low 2（由于头部到右肩的复杂性，信号略显模糊）
• 颈线突破：Low 2 失败后的下跌加速

这种对应关系证明了传统技术分析中的形态学概念可以通过 Bar Counting 来量化和验证。

10. Bar Counting 交易策略框架

10.1 核心交易策略：High 2 / Low 2 突破

这是最基本也最重要的 Bar Counting 策略。

多头策略（High 2 突破买入）：

入场条件：
  1. 确认上升趋势（EMA 向上、连续高点低点上移）
  2. 出现两腿回调（ABC 结构）
  3. C 腿中形成 High 2 信号柱线
  4. 信号柱线收盘在 High 2 高点上方

入场：下一个柱线的开盘价市价买入，或在 High 2 高点上方 1 tick 挂限价买入
止损：C 腿低点下方 1 tick，或 A 腿低点下方
目标：1) 双倍回调幅度  2) 前高  3) 趋势延续至出现新的反转信号
仓位：正常仓位

空头策略（Low 2 突破卖出）：

入场条件：
  1. 确认下降趋势
  2. 出现两腿反弹（向上 ABC 结构）
  3. C 腿中形成 Low 2 信号柱线
  4. 信号柱线收盘在 Low 2 低点下方

入场：下一个柱线开盘市价卖出，或在 Low 2 低点下方 1 tick 挂限价卖出
止损：C 腿高点上方 1 tick
目标：前低，或下跌延续至出现新的反转信号
仓位：正常仓位

10.2 进阶策略：反趋势 Bar Counting

在趋势明显减弱时（第三腿出现、动量和力度衰减），可以使用反趋势的 Bar Counting 策略。

反趋势多头策略： 在市场处于下跌趋势末期，出现 High 3 或 High 4 信号，并且：

• 价格已经到达关键支撑位
• 信号柱线具有较大的实体
• 市场出现背离（价格新低但动量指标未新低）

反趋势空头策略： 在市场处于上涨趋势末期，出现 Low 3 或 Low 4 信号，并且：

• 价格已经到达关键阻力位
• 信号柱线实体大
• 出现动量背离

⚠ 注意：反趋势策略的风险较大，建议：

• 仓位减半
• 止损收窄
• 严格在反转确认后才能入场（不能预判反转）

10.3 多时间框架 Bar Counting

利用分形特性，在多时间框架上同步分析 Bar Counting：

大时间框架（如 60 分钟图）：

• 确定趋势方向
• 观察当前处于哪条腿（第一腿、第二腿还是第三腿）
• 确定 Main Trade Direction（主要交易方向）

中等时间框架（如 5 分钟图）：

• 确定具体入场时机
• 识别具体的 High/Low 计数
• 确定止损位

小时间框架（如 1 分钟图）：

• 优化入场时机
• 观察信号柱线的微观结构
• 做最后的微调

多时间框架的决策流程：

1. 60分钟图：趋势上升 → 只做多
2. 5分钟图：出现两腿回调 → 等待 High 2
3. 1分钟图：High 2 信号柱线实体大 → 入场买入
4. 回到 5 分钟图：设止损、算目标

11. 图表示例逐条分析

Brooks 在 Chapter 17 中使用了 13 张图表来说明 Bar Counting 的各种变体。以下是对这些图表的关键分析。

11.1 基本 Bar Counting 图表（Figures 17.1-17.3）

这些图表展示了最基本的 High 1、Low 1、High 2、Low 2 结构。

关键观察：

• 在清晰的趋势中，High 1/H 和 Low 1/L 的标记本身就构成了对趋势状态的描述
• High 2 和 Low 2 的标签几乎总是出现在 ABC 结构的末端
• 趋势中的信号比交易区间中的信号更清晰、更可靠

操作启示：

• 初学者应首先在清晰的趋势环境中练习 Bar Counting
• 在信号出现前就预先设想可能的计数位置
• 不要数到 High 3 或 Low 3 还在期待原趋势延续

11.2 强趋势中的 High 2 / Low 2（Figure 17.4-17.5）

这些图表展示了在强趋势环境下，High 2（买入）/ Low 2（卖出）信号是如何运作的。

关键观察：

• 在强上升趋势中，High 2 入场位置可能高于 High 1
• 这是因为回撤非常浅，价格几乎在横盘整理后就继续上涨
• 在强下降趋势中，Low 2 入场位置可能低于 Low 1

操作启示：

• 强趋势中的回撤往往对应横盘而非深跌
• 在这种情况下，可以等待 High 2 / Low 2 信号出现的柱线收盘后入场
• 不要等价格回到均线——在强趋势中价格可能永远不会回到均线

11.3 交易区间中的 Bar Counting（Figures 17.6-17.9）

这些图表展示了在交易区间中，Bar Counting 的应用更为复杂。

关键观察：

• 交易区间中的 High 2 买入位置在均线下方，而非上方
• 同一图表中可能同时出现 High 2 和 Low 2 信号
• 区间交易的核心是高抛低吸，Bar Counting 帮助识别具体的买入/卖出点位

操作启示：

• 区间交易中不要使用趋势策略（追高买入或杀跌做空）
• 等待价格到达区间边界后再使用 Bar Counting 入场
• 如果在区间中部出现信号，应谨慎（可能只是噪音）

11.4 复杂结构的 Bar Counting（Figures 17.10-17.13）

这些图表展示了包含 Spike and Channel、楔形等复杂形态的 Bar Counting。

关键观察：

• 楔形顶通常被标记为 Low 3 / Low 4（三推/四推耗尽）
• Spike and Channel 模式的 Channel 部分通常会形成两腿运动
• 图表中的数字标记有时存在争议（不同交易者会有不同的计数方式）

操作启示：

• 当市场出现复杂结构时，Bar Counting 的标记本身就成了交易策略的指南
• 如果无法清晰计数，说明市场处于深度交易区间，应使用区间交易策略
• 与其他交易者交换对 Bar Counting 的理解有助于提高自己的识别能力

12. 常见错误与心理陷阱

12.1 计数错误

错误一：在趋势方向上计数 在清晰的上升趋势中，试图标记”High 1”是错误的——因为每根柱线都在创新高，Bar Counting 不适用于单边运动。Bar Counting 只适用于回调或横盘阶段。

纠正：只在回调/横盘阶段计 High/Low 数。在趋势方向上，关注的是有多少根柱线在延续趋势，而不是计数。

错误二：忽略微小的趋势线突破 如果没有微小的趋势线突破就在 High 1 和 High 2 之间切换，那么 High 2 不可靠。

纠正：在标记 High 2 之前，先确认在 High 1 和 High 2 之间至少有一次短暂的价格向趋势方向的运动（趋势交易者仍然活跃）。

错误三：在交易区间中使用趋势的 Bar Counting 规则 在交易区间中将 High 2 视为”追高买入”（趋势策略），但实际上在区间中它是”抄底买入”。

纠正：交易前先确认市场是趋势还是区间。趋势用趋势策略，区间用区间策略。

12.2 心理陷阱

陷阱一：急于入场 看到 High 1 后立刻买入，没有等待 High 2（或确认信号）。

后果：在真正的入场信号出现之前就已经被止损出局。

破解：坚持等待 High 2 / Low 2。除非趋势非常强（极少数情况），否则 High 1 / Low 1 的失败率远高于成功率。

陷阱二：完美主义 等待”完美的” High 2 信号，结果最佳时机已经错过。

后果：要么错过交易机会，要么在更高的位置追入。

破解：接受不完美的信号。只要结构合理、信号柱线实体足够，就可以入场。

陷阱三：三次失败后的固执 High 3 / Low 3 失败后仍然坚持原方向交易。

后果：趋势已经完全耗尽，继续原方向交易必然亏损。

破解：连续的失败信号本身就是一个强烈的信号——市场方向可能已经改变。

12.3 常见技术错误

错误一：信号识别不完整 只关注单根柱线的突破，忽略了整体结构（ABC 是否完整、趋势线是否突破、均线位置等）。

错误二：止损设置不当

• 在趋势中设置过窄的止损（容易被随机波动打掉）
• 在区间中设置过宽的止损（风险回报比不合理）

错误三：目标设定不合理

• 在趋势中使用区间目标（太保守）
• 在区间中使用趋势目标（太激进）

纠正：每次入场前先明确三个数字——入场价、止损价、目标价。三者缺一不可。

13. Bar Counting 交易检查清单

13.1 入场前检查

趋势判断：

• 大时间框架的趋势方向是？上升/下降/横盘
• 当前处于趋势的第几腿？
• 均线的方向如何？（向上/向下/走平）
• 近期的价格运动是在趋势还是在区间中？

回调/反弹结构：

• 当前回调/反弹是几腿结构？
• A 腿的力度如何？（柱线大小、动量）
• B 腿回撤 A 腿的比例？（<30%/40-62%/>80%）
• C 腿的长度与 A 腿相比？（等长/偏短/偏长）
• 在回调/反弹中是否有微小的趋势线突破？

Bar Counting 信号：

• 当前计数是多少？（High 1/2/3/4 或 Low 1/2/3/4）
• 信号柱线的实体大小？
• 信号柱线的收盘位置？（突破幅度）
• 是否有跨时间框架的确认？

13.2 入场时检查

• 入场价位已确定（市价/限价）
• 止损价位已确定（下方/上方 1 tick）
• 止损距离是否合理？（1-2 倍 ATR 以内）
• 目标价位已确定（双倍回调/前高前低/趋势延续）
• 风险回报比是否 ≥ 2:1？
• 仓位规模是否符合资金管理规则？

13.3 持仓后检查

• 价格是否按照预期方向运动？
• 是否有计划外的变数（新闻、突发事件）？
• 是否已经移动到盈亏平衡？（价格运动幅度 > 止损距离时考虑移动）
• 是否需要部分获利了结？（价格达到第一个目标时）

14. 进阶框架：Bar Counting 评分系统

14.1 信号强度评分

为 High 2 / Low 2 信号打分，决定仓位大小和信心水平：

总分解读： | 总分 | 信号质量 | 仓位建议 | |——|———|———| | +6 到 +4 | 强烈信号 | 满仓（正常仓位） | | +3 到 +1 | 中等信号 | 半仓 | | 0 到 -3 | 弱信号 | 轻仓或不交易 | | -4 以下 | 噪音 | 不交易 |

14.2 多时间框架决策树

大框架趋势方向？
├── 上升趋势
│   ├── 出现 HIGH 计数 → 关注买入机会
│   │   ├── High 1 → 等待，可能太早
│   │   ├── High 2 → 买入！ABC 回调完成
│   │   └── High 3 → 谨慎买入，趋势可能耗尽
│   └── 出现 LOW 计数 → 关注获利了结/减仓
│       ├── Low 1 → 预警，可能回调开始
│       ├── Low 2 → 减仓信号
│       └── Low 3 → 清仓，趋势可能反转
│
├── 下降趋势
│   ├── 出现 LOW 计数 → 关注做空机会
│   │   ├── Low 1 → 等待
│   │   ├── Low 2 → 做空！ABC 反弹完成
│   │   └── Low 3 → 谨慎做空
│   └── 出现 HIGH 计数 → 关注获利了结
│
└── 交易区间（横盘）
    ├── 价格在区间底部
    │   ├── High 1 → 轻仓买入
    │   ├── High 2 → 买入
    │   └── High 3 → 强烈买入信号
    └── 价格在区间顶部
        ├── Low 1 → 轻仓卖出
        ├── Low 2 → 卖出
        └── Low 3 → 强烈卖出信号

15. 术语词汇表

16. 关联知识体系

16.1 与 Book 1 的关联

Book 1（趋势分析）中介绍了趋势的定义和识别。Bar Counting 是趋势分析的自然延伸——一旦确认了趋势方向，Bar Counting 提供了具体的入场时机。

关键关联点：

• 趋势线突破 → 微小趋势线突破是 Bar Counting 的必要条件
• 支撑阻力位 → Bar Counting 在关键位附近的意义更大
• 突破 → Bar Counting 中的 High 2 / Low 2 本身就是一种突破形态

16.2 与 Book 3 的关联

Book 3（反转交易）中的反转形态本质上是 Bar Counting 的特殊情况。

关键关联点：

• 双顶 → Low 1 + Low 2 在顶部的失败=双顶反转
• 双底 → High 1 + High 2 在底部的成功=双底反转
• 头肩顶 → 三次上涨后的 Low 2 失败
• 楔形反转 → High 3 / Low 3 模式

16.3 与本章前面（Ch16-17）的关联

• Chapter 16（腿数分析）提供了”市场处于第几条腿”的高级框架
• Chapter 17（Bar Counting）提供了”具体在哪个点位入场”的微观工具
• 两者结合：用腿数分析找方向，用 Bar Counting 找时机

16.4 与传统技术分析的对照

17. Bar Counting 中的交易心理

17.1 计数与决策的心理压力

Bar Counting 虽然提供了客观的量化框架，但执行过程中仍然面临心理挑战：

在等信号时的焦虑： 当市场大幅波动而你按兵不动等待 High 2 时，会感到巨大的 FOMO（害怕错过）。这种焦虑是正常的，但必须克制。规则就是规则——不在 High 1 入场。

应对：提醒自己——如果这是真的趋势，错过 High 1 后还有大量空间；如果不是真的趋势，High 1 被止损的概率极高。

17.2 计数混乱时的困惑

当市场结构复杂，Bar Counting 标记不清晰时（比如既有 High 计数又有 Low 计数，且频繁交替），交易者容易陷入困惑。

应对：在这种情况下，最好的策略是”不交易”。如果 Bar Counting 都不清晰，市场一定处于深度区间中，此时强行交易的胜率很低。

17.3 纪律训练

Bar Counting 是一个天然的纪律训练工具：

• 它告诉你什么时候入场（不能早也不能晚）
• 它告诉你什么时候应该止损（信号失败时）
• 它告诉你什么时候应该离场（目标达到或信号反转时）

每遵守一次规则，都是在训练自己的交易纪律。长期坚持，Bar Counting 会成为你条件反射的一部分。