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. Prior to now week or so, the inventory market in China and Hong Kong has been on fireplace. It has this file breaking rally that no person has ever seen.
A few of China’s high firms are listed within the US as effectively. In truth, 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 value being attentive to. Not only for merchants in Asia, however for merchants, buyers from all around the world.
I wish to thank Al and Richard for giving me this chance to speak to you guys about what has been taking place 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 really traded this all the way in which up.
I submit my account and buying and selling information in my very own channel. And on this video, the very first thing I’m going to speak about is learn how to commerce such a powerful breakout, learn how 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 increased and better.
Now, in terms of the Shanghai composite index. 3,000 factors has at all times been thought of as one thing extraordinarily essential as a result of for those who 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 sturdy assist or resistance close to 3,000 factors. And in China, they’ve one thing known as defend 3,000 factors. As you’ll be able to 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 wish to purchase right here. Simply overlook concerning the defend 3,000 factors factor as a result of the market has been in a reasonably tight bear channel. In case 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’ll be able to draw the pattern traces and also you’ll discover the channel being extraordinarily tight.
So it is a tight bear channel on a every day chart. And if we go to the weekly chart. That is really a powerful bear breakout, a sequence of consecutive bear bars. So the market was at all times in brief and also you simply can’t assume there’s assist at 3,000 factors. You need to assume that the market will preserve happening not less than a small leg down.
So the market broke under it, pull again, retest the three,000 factors. It was assist and now it turned resistance after which stored happening. Nonetheless, for those who take a look at these two large bull bars. They instructed you that the perfect bears can get might be a buying and selling vary, which implies there’s most likely far more consumers than sellers under this space.
Let’s return to the every day chart. Within the video course, Al talks concerning the significance of the bottom shut in a bear pattern and the very best shut in a bull pattern. Since I used to be trying to purchase the dip, I used to be being attentive to the bottom shut of the earlier bear pattern, which is correct right here. And you’ll see That is precisely the place the market began to rally.
So I didn’t purchase something till right here. Since there’s no approach I may 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 elementary modifications occurred. And it’s fairly attention-grabbing that information or elementary modifications at all times occur close to a powerful assist or resistance.
Identical 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 % inside simply two weeks, however that’s how the market works. When the market arrives at a powerful assist or resistance, or possibly a nested wedge, one thing would occur.
If not a pandemic, possibly one thing else. And that can trigger the market to crash or deep pullback as effectively. And that’s not a coincidence for my part. As a result of the whole lot, each risk has been priced in. So worth motion is the whole lot. Worth motion is the reality. Similar 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 really 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 pattern line. It broke above some transferring averages for certain. And it’s shut. is above the shut of earlier possibly 15 bars. So very sturdy 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 comply with by means of seem like. And right here’s what we received. It’s a small doji bar with a bit bit bear physique, outstanding tail above. Is that this a superb comply with by means of or a horrible comply with by means of? To me, it’s a superb comply with by means of, not less than acceptable, as a result of it closed above yesterday’s excessive and it has a spot up.
The hole continues to be open. However for those who sadly have learn some books which have deceptive data, you most likely wish to promote out all of your place right here, otherwise you most likely wish to go brief. However no, it is a good comply with by means of 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 wish to speak a bit bit about one thing known as apophenia. Once they see a bar like this, they’ll really feel like if the market may go down like this, then this sample is simply so stunning. It will simply look as stunning as a tower. So folks have a tendency to attach issues which might be really not associated in any respect.
And that is caught at Buffini. However in case 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 under the low of the earlier bar. However that is an implied pullback as a result of for those who go to a smaller time-frame, you’ll see an precise pullback.
So folks at all times discuss, effectively, that is too quick. I wish to purchase the pullback. Properly, this shut is an ideal place so that you can purchase. In case you take a look at some form of line chart, it appears like this. So it is a pullback. And it’s an incredible entry for the bulls. See what’s taking place subsequent. One other large bull bar closing on its excessive.
These two bars, they don’t have 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. Individuals come to me and ask too quick, too excessive, a bit bit scary. I wish to look forward to 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 worth drops a bit bit and a bunch of individuals simply flooding to the market and purchase the pullback, which implies 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 % of your entire account, however 20 % of your regular place dimension. Merchants shopping for listed below are very assured about two issues.
Both the market will preserve going up, or even when there’s a pullback, They will purchase decrease as a result of not less than 80 % of the possibility it’ll have a second leg up. So I purchased right here with a tiny place, took most of my revenue right here unexpectedly. 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 all around the world. They’re afraid that if they’re slower than one other establishment, they must purchase at a better worth later. It’s fairly climactic.
However since I feel it’s the primary leg up, I contemplate all of the gaps being breakout gaps or measuring gaps. One other bull bar closing on its excessive and not using a inform in any respect. This tells you that everybody is shopping for the shut. I used to be about 40 % in. Once I say 40%, what I imply is definitely 40 % 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 % of my cash in account. I’d have put in extra money. I wished to take action, however sadly the opposite 60 % of my cash I gave him to my fund supervisor and he purchased a bunch of mutual funds for me.
They usually’re not expired but. So I couldn’t take them out. In any other case I may 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%. Generally 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 continues 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 just a few days, it’ll 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 preserve not less than 50 % of my place as a result of this bull breakout is simply so sturdy and I’ve to imagine that the primary reversal down, it doesn’t matter what occurred will probably be purchased similar to what occurred in Hong Kong at this time, if we take a look at the 5 minute chart, fairly sturdy dump from the open.
One pullback to pause three. So it is a parabolic wedge. It’s a pretty tight bear channel, however you must take into consideration what occurred on the left hand facet. It’s such a powerful bull breakout that any reversal down could be purchased. So sturdy noon reversal rallied all the way in which as much as the open, however as a result of the opening pattern is powerful sufficient.
So 90 % of the possibility at this time is a coaching vary day, which implies 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 consumers at this space. I talked about my private plan sooner or later, and I’ll preserve updating my accounts and buying and selling information in my channel.
After all I could possibly be fallacious. Al Brooks talks about his 60 40 rule. Don’t be over assured about something. However I do assume not less than 80 % of the possibility, even when it has a pullback, for certain, it’ll have a pullback as a result of this sort of climactic transfer can now final too lengthy. It’s going to pull again, go sideways for some time.
However anyhow, I plan to take partial revenue trying to purchase decrease, trying to scaling decrease. And actually, 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 part ends, the market most likely evolves right into a buying and selling vary or a channel.
Let’s say the market has some form 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 preserve not less than 50 % of my place to swing till this bull pattern is now 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 form of sophisticated and tough as a result of the China authorities has actually strict management over international change. So it’s not straightforward to switch {dollars} again to China after which convert them into Chinese language yuan.
It’s fairly powerful for learners or for merchants who are usually not out there but. You’re flat proper now. You most likely heard this one, FOMO, Worry of Lacking Out. However really, there is no such thing as a hurry. As a result of if that is the start of a bull market that lasts months, even one or two years, there will probably be loads of alternatives so that you can enter and earn money.
So there’s actually no hurry in any respect. If it’s not, or if it’s only a bull entice, I personally assume it’s not. However whether it is, Then you definately’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 % of the times, the primary six to 12 bars are in a coaching vary. However for those who get a pair of massive pattern bars like this, There’s a increased chance that there is perhaps a pattern from the open, however nonetheless, irrespective of how sturdy the primary pattern is 80 % of the possibility, there will probably be a minor reversal, 50 % of the possibility there will probably be a significant reversal.
In case you look to the left, really, I’ve been warning my followers for the reason that FOMC just a few weeks in the past, does this seem like a powerful bull breakout? In no way. Massive up, large down, large confusion. Subsequent day, large hole up. Take a look at a comply with by means of 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 need to assume that our breakout will fail. Similar factor right here. Bears try to interrupt under the buying and selling vary. 80 % of probability it’ll fail. So for those who promote right here, promote right here, it’s an affordable commerce.
However you’re actually betting on this being the excessive of the day the place the chance is 20 or 30%, if not decrease. And if it’s the excessive of the day, which implies at this time is both an enormous bear pattern day, or it’s a buying and selling vary day, proper? So you’ll have loads of alternatives. To go brief. So there’s no have to hurry.
Similar factor right here with the every day chart of the Shanghai composite index or Hong Kong Hansan index. So that is what I’d have carried out if I’m flat proper now, as you’ll be able to see in Hong Kong Hansan index right here at this time, it was an enormous bear bar, however approach too many individuals are ready for the pullback. So that they purchased it up.
What would possibly occur is there could possibly be an enormous bear bar closing on its low odds are there will probably be not less than a second lag up. And the bull pattern will proceed. It’s like this on the left hand facet. We’re wanting on the weekly chart of NVIDIA, sturdy bull breakout, possibly 10 bull bars in a row. After which you have got this sturdy bear bar closing on its low, however the bulls like, Hey, it’s a decent channel.
It’s a really sturdy pattern. First time you attempt to reversal. No matter you do, most likely you’re going to fail. So that they purchased that shut and subsequent Monday, the market really gapped up. The identical factor may occur right here. I’m simply saying one of many prospects. Now we’re wanting on the every day chart of spider, the ETF of S&P 500 sturdy bull breakout, a sequence of bull bar closing on their highs, large bear bar closing on sluggish, and it’s an out of doors bar.
However first time reversal try failed. Similar factor right here. Similar factor right here. And identical factor may 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 the moment I haven’t set a goal but. I wish to do a swing commerce.
I wish to maintain my place till the bull pattern is now not legitimate. After all, it may well change into now not legitimate in only a few days. However proper now, I simply need to assume that it’s going to have a second leg up.
All proper, that’s just about what I wish to share at this time. Thanks for listening, and I hope it helps. Have a superb one, and bye bye.
