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 Buying and selling 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 prime corporations are listed within the US as properly. The truth is, there are 200 plus Chinese language corporations listed on NYSE and NASDAQ. With a complete market worth of practically 2 trillion US {dollars}. That’s one thing value listening 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 totally 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 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 tips on how to commerce such a powerful breakout, tips on how to enter, what place measurement did I take advantage of? How did I handle my threat? And the way did I scale into my successful place and perhaps a little bit bit buying and selling psychology of shopping for greater and better.
Now, in relation to the Shanghai composite index. 3,000 factors has all the time been thought-about as one thing extraordinarily essential as a result of should 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 known as shield 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 shield 3,000 factors factor as a result of the market has been in a reasonably tight bear channel. If you happen to take a look at this, there’s some small pullback, however the bull bar will not be that massive. And the pullback solely lasts one or two bars. You possibly can draw the development strains 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 truly a powerful bear breakout, a collection of consecutive bear bars. So the market was all the time in brief and also you simply can’t assume there’s help at 3,000 factors. You need to assume that the market will maintain taking place not 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 grew to become resistance after which stored taking place. Nonetheless, should you take a look at these two large bull bars. They informed you that the very best bears can get might be a buying and selling vary, which implies there’s in all probability far more consumers than sellers beneath 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 development and the very best shut in a bull development. Since I used to be seeking 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’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 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. It is a bull shock as a result of some large elementary modifications occurred. And it’s fairly fascinating that information or elementary modifications all the time occur close to a powerful help 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 help or resistance, or perhaps a nested wedge, one thing would occur.
If not a pandemic, perhaps one thing else. And that can trigger the market to crash or deep pullback as properly. And that’s not a coincidence in my view. As a result of every little thing, each chance has been priced in. So worth motion is every little thing. 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 in all probability 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 totally different.
It has an enormous physique shut on its excessive. It broke above the bear development line. It broke above some transferring averages for certain. And it’s shut. is above the shut of earlier perhaps 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 comply with by way of seem like. And right here’s what we acquired. It’s a small doji bar with a little bit bit bear physique, distinguished tail above. Is that this comply with by way of or a horrible comply with by way of? To me, it’s comply with by way of, not 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 should you sadly have learn some books which have deceptive info, you in all probability wish to promote out all of your place right here, otherwise you in all probability wish to go brief. However no, it is a good comply with by way of and that is only a pullback. So as a substitute of promoting, I purchased extra on this shut.
I scaled in. And right here I wish to speak a little bit bit about one thing known as apophenia. Once 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 stunning. It will simply look as stunning 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 will not be 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 should you go to a smaller timeframe, you’ll see an precise pullback.
So folks all the time speak about, properly, that is too quick. I wish to purchase the pullback. Nicely, this shut is an ideal place so that you can purchase. If you happen to take a look at some sort of line chart, it seems like this. So it is a pullback. And it’s an excellent entry for the bulls. See what’s taking place subsequent. One other large bull bar closing on its excessive.
These two bars, they haven’t any tails above, not even a little bit bit. And to me, that is seven consecutive bull bars and clearly the market is all the time 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 little bit bit scary. I wish to watch for a pullback.
Nonetheless, the issue is. When you find yourself ready for a pullback, in all probability everybody else, each dealer out there is ready for a pullback. Then if the pullback does occur, guess what? The value drops a little bit bit and a bunch of individuals simply flooding to the market and purchase the pullback, which implies there’s in all probability 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 often means 20%. It’s not 20 % of your complete account, however 20 % of your regular place measurement. Merchants shopping for listed below 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 not less than 80 % 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 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 believe 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 with no inform in any respect. This tells you that everybody is shopping for the shut. I used to be about 40 % in. After 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 Truly 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 might 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 might have purchased extra. And, uh, um, you’ll see what occurred subsequent day is large bull bar one other 8%. And that is the index, the entire market rallied 8%. Typically you will 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 as if that when the market reopens in just a few 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 massive bull bar, however it doesn’t matter what, I’ll maintain not less than 50 % 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 can be purchased similar to what occurred in Hong Kong right now, if we take a look at the 5 minute chart, fairly robust dump from the open.
One pullback to pause three. So it is a parabolic wedge. It’s a pretty tight bear channel, however it’s a must 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 % of the possibility right now is a coaching vary day, which implies even when it’s a serious reversal, it’s not going to interrupt far above the open. So there are in all probability extra sellers than consumers at this space. I talked about my private plan sooner or later, and I’ll maintain updating my accounts and buying and selling information in my channel.
In fact I could possibly be unsuitable. 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 should have a pullback as a result of this type of climactic transfer can now final too lengthy. It should pull again, go sideways for some time.
However in any case, I plan to take partial revenue seeking to purchase decrease, seeking to scaling decrease. And in reality, I want there could be a deep pullback greater than anybody else as a result of my cash will not be prepared but. Nonetheless, as soon as the market begins to drag again the breakout section ends, the market in all probability 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 a substitute of shopping for excessive and better, I’ll begin to purchase the dip and take partial revenue after I see one other climatic massive bull bars and able to purchase decrease. However I’ll all the time maintain not less than 50 % 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. Nevertheless it’s sort of difficult and tough as a result of the China authorities has actually strict management over overseas alternate. So it’s not simple to switch {dollars} again to China after which convert them into Chinese language yuan.
It’s fairly robust for newcomers or for merchants who are usually not out there but. You’re flat proper now. You in all probability heard this one, FOMO, Concern 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 can be loads of alternatives so that you can enter and become profitable.
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 % of the times, the primary six to 12 bars are in a coaching vary. However should you get a pair of huge development bars like this, There’s a greater chance that there could be a development from the open, however nonetheless, regardless of how robust the primary development is 80 % of the possibility, there can be a minor reversal, 50 % of the possibility there can be a serious reversal.
If you happen to look to the left, truly, 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? Under no circumstances. Large up, massive down, massive confusion. Subsequent day, large hole up. Have a look at a comply with by way of this hole is closed immediately and a bunch of buying and selling vary worth motion.
One other large hole up, however the hole was closed immediately. One other failed breakout within the buying and selling vary. You need to assume that our breakout will fail. Identical factor right here. Bears are attempting to interrupt beneath the buying and selling vary. 80 % of likelihood it should fail. So should you 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 right now is both an enormous bear development 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.
Identical factor right here with the every day chart of the Shanghai composite index or Hong Kong Hansan index. So that is what I might have accomplished if I’m flat proper now, as you’ll be able to see in Hong Kong Hansan index right here right now, it was an enormous 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 could possibly be an enormous bear bar closing on its low odds are there can be not 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, perhaps 10 bull bars in a row. After which you’ve this robust bear bar closing on its low, however the bulls like, Hey, it’s a good channel.
It’s a really robust development. First time you attempt to reversal. No matter you do, in all probability 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 potentialities. Now we’re wanting on the every day chart of spider, the ETF of S&P 500 robust bull breakout, a collection of bull bar closing on their highs, massive bear bar closing on gradual, and it’s an outdoor bar.
However first time reversal try failed. Identical factor right here. Identical factor right here. And identical factor might occur right here as properly. 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 development is not legitimate. In fact, it could actually develop 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 wish to share right now. Thanks for listening, and I hope it helps. Have one, and bye bye.