Don't understand how to stay out of this one

[ahwilliams30]

I don't understand how to stay out of this green trade. Can anyone help?

Here are the positives and negatives that I see:

+Looking for break and new high of UT
+Going from daily range low to range high
-Have passed the mid line of the range
-Signal bar is doji-like so not super strong
+Signal bar closes within 1 tick of highs so is decently strong
+Short term down trend has played out with break and new low
+Off of the EMA in hard mode
-There's no convincing test of the smaller range breakout
-There are some stacked bars

[eric-pal]

Well, there is always the thought that one has to know what is to the right to analyze it, and this is not the case. After reviewing many different days and how prices begin to express themselves, you become familiar with potentials - not absolutes, but potentials. And within those potentials, we work to align as many variables as possible in our favor. 75%+ probability is not a coin flip.

The listing:
+Looking for break and new high of UT [that is the potential, but move may be exhaustive. Read commentary]
+Going from daily range low to range high [high -> low -> high in large moves]
-Have passed the mid line of the range
-Signal bar is doji-like so not super strong [doji's are poor signal bars. In fact they are signal bars in trading ranges (no bias)]
+Signal bar closes within 1 tick of highs so is decently strong [no. doji -> indecision. 1 tick from high even more indecision]
+Short term down trend has played out with break and new low [exhaustive. review commentary]
+Off of the EMA in hard mode [yes. However, the move may be exhaustive, like the downmove. Review]
-There's no convincing test of the smaller range breakout
-There are some stacked bars [let market move first]

There are some good points listed above, and please keep in mind the context throughout everything. In reviewing the enclosed graphic, you see the large selloff, in a tight channel. Let's be clear - it isn't a minor selloff is it? In fact, that remains a major influence for quite some time doesn't it? And as it does, through all of the next series of bars, one still expects a retest right? But does that happen immediately? NO! In fact, it is worth one's time to review how after that large selloff (which is exhaustive), prices move into more of a trading range, back and forth, and THEN FINALLY THE RETEST HAPPENS. But it is a weak retest isn't it? Through the trading range that formed, are there definitive bull and bear biases that indicate that the retest is going to decisively happen? Not so much. It seems fairly balanced and back and forth - much like a trading range is expected to move.

So when the weak lower retest happens, and nice work on seeing the previous potential area of support, note the strong liftoff from that area. Not just 1 nice bar but a series. And the really "pushed the gas accelerator" on that car until . . . the top of the trading range. Interesting. . . and then "they are figuring it out". Bulls clearly win, and where to they accelerate to next? Right, to where the very large selloff happened in the first place. This is not accidental.

But the whole up move, was as fast and overdone as the selloff. These are exhaustive moves. So when the pullback happens, is it going to immediately try to retest the highs? Did it at the bottom? So, in that minor selloff, where little bullish activity is present, why is the doji bar even considered as a signal bar, let alone a good one? Doji is a 1 bar trading range (especially on a lower timeframe chart). Not finishing on the high of a doji becomes even more indicative of indecisiveness of continuation. Please review the red areas, and consider what prices are attempting to do.

Let the market move first and show the bias and one's probabilities quickly improve.

Hopefully helpful and good trades to you!

[ahwilliams30]

Thank you for the detailed analysis Eric. This is very helpful.