Observe Louie’s Chinese language YouTube channel for extra Al Brooks worth motion evaluation.
Transcript
Hello everybody, that is Louie. I’m a full time dealer. I commerce choices and futures, and I’m so honored to assist translate Chinese language subtitles for the Brooks Trading Course. Previously week or so, the inventory market in China and Hong Kong has been on fireplace. It has this document breaking rally that no person has ever seen.
A few of China’s high firms are listed within the US as effectively. In actual fact, there are 200 plus Chinese language firms listed on NYSE and NASDAQ. With a complete market worth of almost 2 trillion US {dollars}. That’s one thing price listening to. Not only for merchants in Asia, however for merchants, traders from everywhere in the world.
I need to thank Al and Richard for giving me this chance to speak to you guys about what has been occurring in China. Let’s get into that. Personally, I don’t commerce the Hong Kong market. Most of my trades happen within the US market. I commerce choices of indexes and completely different sorts of shares. However I do have a smaller account in China and I truly traded this all the way in which up.
I put up my account and buying and selling data in my very own channel. And on this video, the very first thing I’m going to speak about is the way to commerce such a powerful breakout, the way to enter, what place dimension did I exploit? How did I handle my threat? And the way did I scale into my successful place and possibly a bit bit buying and selling psychology of shopping for greater and better.
Now, in terms of the Shanghai composite index. 3,000 factors has at all times been thought of as one thing extraordinarily vital as a result of in case you look to the left, the market has been in an enormous buying and selling vary for nearly 8 to 10 years, which is loopy. It simply stored consolidating up and down round 3,000 factors.
So lots of people assume, um, there’s going to be some robust help or resistance close to 3,000 factors. And in China, they’ve one thing referred to as shield 3,000 factors. As you possibly can see right here. The market broke above after which comes again to check 3,000 factors, it bounced, it bounced once more. However proper right here in June 2024, which is three months in the past, I stored warning my followers.
You don’t need to purchase right here. Simply overlook concerning the shield 3,000 factors factor as a result of the market has been in a reasonably tight bear channel. When you take a look at this, there’s some small pullback, however the bull bar isn’t that large. And the pullback solely lasts one or two bars. You may draw the development strains and also you’ll discover the channel being extraordinarily tight.
So this can be a tight bear channel on a day by day chart. And if we go to the weekly chart. That is truly a powerful bear breakout, a collection of consecutive bear bars. So the market was at all times in brief and also you simply can’t assume there’s help at 3,000 factors. You must assume that the market will maintain taking place no less than a small leg down.
So the market broke beneath it, pull again, retest the three,000 factors. It was help and now it turned resistance after which stored taking place. Nonetheless, in case you take a look at these two large bull bars. They informed you that one of the best bears can get might be a buying and selling vary, which suggests there’s most likely far more patrons than sellers beneath this space.
Let’s return to the day by day chart. Within the video course, Al talks concerning the significance of the bottom shut in a bear development and the best shut in a bull development. Since I used to be trying to purchase the dip, I used to be listening to the bottom shut of the earlier bear development, which is true right here. And you may see That is precisely the place the market began to rally.
So I didn’t purchase something till right here. Since there’s no manner I might see this coming. I purchased with a tiny place as a result of I plan to, um, scaling decrease betting on the breakout to fail. This can be a bull shock as a result of some large basic adjustments occurred. And it’s fairly fascinating that information or basic adjustments at all times occur close to a powerful help or resistance.
Similar to right here. And I remembered Al warned a few deep pullback proper earlier than the pandemic in 2020. And clearly Al didn’t foresee the pandemic. He didn’t foresee the market would crash 30 p.c inside simply two weeks, however that’s how the market works. When the market arrives at a powerful help or resistance, or possibly a nested wedge, one thing would occur.
If not a pandemic, possibly one thing else. And that may trigger the market to crash or deep pullback as effectively. And that’s not a coincidence in my view. As a result of all the things, each risk has been priced in. So worth motion is all the things. Worth motion is the reality. Identical factor right here. Now, since I didn’t see it coming and I used to be questioning nonetheless tight bear channel, even tighter on the weekly chart, the primary reversal up most likely would fail.
So I positioned a bunch of promote restrict orders right here to take revenue. And I didn’t pay an excessive amount of consideration to the Chinese language market again then. Um, as a result of that’s not my main market. So this bull shock truly hit my orders and I took most of my revenue right here. However after I see this one, I spotted one thing’s completely different.
It has an enormous physique shut on its excessive. It broke above the bear development line. It broke above some shifting averages for certain. And it’s shut. is above the shut of earlier possibly 15 bars. So very robust breakout. And I spotted issues have modified. Bulls are shopping for, bears are getting burned, they’re getting out.
So I used to be questioning what would the observe by appear like. And right here’s what we bought. It’s a small doji bar with a bit bit bear physique, outstanding tail above. Is that this observe by or a horrible observe by? To me, it’s observe by, no less than acceptable, as a result of it closed above yesterday’s excessive and it has a spot up.
The hole remains to be open. However in case you sadly have learn some books which have deceptive info, you most likely need to promote out all of your place right here, otherwise you most likely need to go brief. However no, this can be a good observe by and that is only a pullback. So as an alternative of promoting, I purchased extra on this shut.
I scaled in. And right here I need to discuss a bit bit about one thing referred to as apophenia. After they see a bar like this, they’ll really feel like if the market might go down like this, then this sample is simply so lovely. It could simply look as lovely as a tower. So folks have a tendency to attach issues which might be truly not associated in any respect.
And that is caught at Buffini. However when you have watched the video course rigorously, when Al talks about pullbacks and bar counting, he gave you the definition of a pullback. This bar isn’t an precise pullback as a result of it didn’t break beneath the low of the earlier bar. However that is an implied pullback as a result of in case you go to a smaller timeframe, you’ll see an precise pullback.
So folks at all times speak about, effectively, that is too quick. I need to purchase the pullback. Nicely, this shut is an ideal place so that you can purchase. When you take a look at some sort of line chart, it appears to be like like this. So this can be a pullback. And it’s a fantastic entry for the bulls. See what’s occurring subsequent. One other large bull bar closing on its excessive.
These two bars, they haven’t any tails above, not even a bit bit. And to me, that is seven consecutive bull bars and clearly the market is at all times in lengthy. So I purchased extra on this shut once more, the identical query. Folks come to me and ask too quick, too excessive, a bit bit scary. I need to anticipate a pullback.
Nonetheless, the issue is. When you’re ready for a pullback, most likely everybody else, each dealer out there is ready for a pullback. Then if the pullback does occur, guess what? The value drops a bit bit and a bunch of individuals simply flooding to the market and purchase the pullback, which suggests there’s most likely no pullback in any respect.
And Al talks about it. Everytime you really feel like ready for a pullback, don’t wait, simply purchase. Purchase the garments, purchase the market, however with a really small place. When Al says small place, he normally means 20%. It’s not 20 p.c of your complete account, however 20 p.c of your regular place dimension. Merchants shopping for listed here are very assured about two issues.
Both the market will maintain going up, or even when there’s a pullback, They’ll purchase decrease as a result of no less than 80 p.c of the possibility it should have a second leg up. So I purchased right here with a tiny place, took most of my revenue right here abruptly. And I purchased extra right here, purchased extra right here. Everytime you see one thing like this.
It tells you that everybody is shopping for in determined. A bunch of establishments are shopping for in determined, not simply Chinese language establishments, however establishments from everywhere in the world. They’re afraid that if they’re slower than one other establishment, they must purchase at the next worth later. It’s fairly climactic.
However since I believe it’s the primary leg up, I think about all of the gaps being breakout gaps or measuring gaps. One other bull bar closing on its excessive with no inform in any respect. This tells you that everybody is shopping for the shut. I used to be about 40 p.c in. After I say 40%, what I imply is definitely 40 p.c of the cash I’ve within the account in China.
I discussed earlier that, um, my account in China is Really a comparatively small account. It’s not futures. I purchased shares. Um, and I didn’t use margins. So it’s simply 40 p.c of my cash in account. I’d have put in extra money. I needed to take action, however sadly the opposite 60 p.c of my cash I gave him to my fund supervisor and he purchased a bunch of mutual funds for me.
And so they’re not expired but. So I couldn’t take them out. In any other case I might have purchased extra. And, uh, um, you’ll see what occurred subsequent day is big bull bar one other 8%. And that is the index, the entire market rallied 8%. Typically you may get consecutive by climax similar to this. And that is the final buying and selling day.
Earlier than October eighth, as a result of it’s nationwide vacation in China, very lengthy vacation. So folks have a seven day break. Nonetheless, the inventory market in Hong Kong remains to be open. Let’s see what occurred. This large bull bar is September thirtieth. which is right here. It’s a small doji in Hong Kong market, one other large bull bar, after which a small bear bar closing above its midpoint.
So the market stored rallying. And it looks like that when the market reopens in a couple of days, it should have one other hole up. And that’s after I plan to take partial revenue. If it’s an enormous hole up or one other large bull bar, however it doesn’t matter what, I’ll maintain no less than 50 p.c of my place as a result of this bull breakout is simply so robust and I’ve to imagine that the primary reversal down, it doesn’t matter what occurred shall be purchased similar to what occurred in Hong Kong as we speak, if we take a look at the 5 minute chart, fairly robust dump from the open.
One pullback to pause three. So this can be a parabolic wedge. It’s a pretty tight bear channel, however you need to take into consideration what occurred on the left hand aspect. It’s such a powerful bull breakout that any reversal down can be purchased. So robust noon reversal rallied all the way in which as much as the open, however as a result of the opening development is powerful sufficient.
So 90 p.c of the possibility as we speak is a coaching vary day, which suggests even when it’s a significant reversal, it’s not going to interrupt far above the open. So there are most likely extra sellers than patrons at this space. I talked about my private plan sooner or later, and I’ll maintain updating my accounts and buying and selling data in my channel.
In fact I may very well be fallacious. Al Brooks talks about his 60 40 rule. Don’t be over assured about something. However I do assume no less than 80 p.c of the possibility, even when it has a pullback, for certain, it should have a pullback as a result of this sort of climactic transfer can now final too lengthy. It’ll pull again, go sideways for some time.
However anyhow, I plan to take partial revenue trying to purchase decrease, trying to scaling decrease. And in reality, I want there could be a deep pullback greater than anybody else as a result of my cash isn’t prepared but. Nonetheless, as soon as the market begins to drag again the breakout section ends, the market most likely evolves right into a buying and selling vary or a channel.
Let’s say the market has some sort of pullback and that’s when I’ll begin to change the way in which I commerce as a result of the market cycle has modified. So as an alternative of shopping for excessive and better, I’ll begin to purchase the dip and take partial revenue after I see one other climatic large bull bars and able to purchase decrease. However I’ll at all times maintain no less than 50 p.c of my place to swing till this bull development is not legitimate.
I discussed earlier that my account in China is a comparatively small one. So I do have the plan to switch extra money again to China. However it’s sort of sophisticated and troublesome as a result of the China authorities has actually strict management over overseas change. So it’s not simple to switch {dollars} again to China after which convert them into Chinese language yuan.
It’s fairly robust for newbies or for merchants who usually are not out there but. You’re flat proper now. You most likely heard this one, FOMO, Worry of Lacking Out. However truly, there isn’t a hurry. As a result of if that is the start of a bull market that lasts months, even one or two years, there shall be loads of alternatives so that you can enter and earn a living.
So there’s actually no hurry in any respect. If it’s not, or if it’s only a bull lure, I personally assume it’s not. However whether it is, You then’re trapped. So in both case, there’s no hurry. That really jogs my memory of what occurred yesterday within the e mini. So we’re wanting on the 5 minute chart of ES on the open three consecutive bear bars closing on their lows.
Now, 80 p.c of the times, the primary six to 12 bars are in a coaching vary. However in case you get a pair of huge development bars like this, There’s a greater likelihood that there could be a development from the open, however nonetheless, irrespective of how robust the primary development is 80 p.c of the possibility, there shall be a minor reversal, 50 p.c of the possibility there shall be a significant reversal.
When you look to the left, truly, I’ve been warning my followers for the reason that FOMC a couple of weeks in the past, does this appear like a powerful bull breakout? In no way. Massive up, large down, large confusion. Subsequent day, large hole up. Have a look at a observe by this hole is closed straight away and a bunch of buying and selling vary worth motion.
One other large hole up, however the hole was closed straight away. One other failed breakout within the buying and selling vary. You must assume that our breakout will fail. Identical factor right here. Bears try to interrupt beneath the buying and selling vary. 80 p.c of probability it should fail. So in case you promote right here, promote right here, it’s an inexpensive commerce.
However you’re actually betting on this being the excessive of the day the place the likelihood is 20 or 30%, if not decrease. And if it’s the excessive of the day, which suggests as we speak is both a giant bear development day, or it’s a buying and selling vary day, proper? So you should have loads of alternatives. To go brief. So there’s no have to hurry.
Identical factor right here with the day by day chart of the Shanghai composite index or Hong Kong Hansan index. So that is what I’d have finished if I’m flat proper now, as you possibly can see in Hong Kong Hansan index right here as we speak, it was a giant bear bar, however manner too many individuals are ready for the pullback. In order that they purchased it up.
What would possibly occur is there may very well be a giant bear bar closing on its low odds are there shall be no less than a second lag up. And the bull development will proceed. It’s like this on the left hand aspect. We’re wanting on the weekly chart of NVIDIA, robust bull breakout, possibly 10 bull bars in a row. After which you might have this robust bear bar closing on its low, however the bulls like, Hey, it’s a decent channel.
It’s a really robust development. First time you attempt to reversal. No matter you do, most likely you’re going to fail. In order that they purchased that shut and subsequent Monday, the market truly gapped up. The identical factor might occur right here. I’m simply saying one of many prospects. Now we’re wanting on the day by day chart of spider, the ETF of S&P 500 robust bull breakout, a collection of bull bar closing on their highs, large bear bar closing on gradual, and it’s an out of doors bar.
However first time reversal try failed. Identical factor right here. Identical factor right here. And identical factor might occur right here as effectively. Once more, that’s simply my private buying and selling plan. And I see all these establishments are shopping for in determined, so I don’t assume they’re shopping for for a scalp. So at present I haven’t set a goal but. I need to do a swing commerce.
I need to maintain my place till the bull development is not legitimate. In fact, it might change into not legitimate in only a few days. However proper now, I simply should assume that it’ll have a second leg up.
All proper, that’s just about what I need to share as we speak. Thanks for listening, and I hope it helps. Have one, and bye bye.
