Galen Woods All Charts

1. Up bars with higher high and higher low

2. Down bars with lower high and lower low

4. Outside bars with higher high and lower low

3. Inside bars with lower high and higher low

2. Outside bar broke above last swing high, forming an upswing without an up bar Up bar

Down bar Up bar

1. Down bar Down bar

3. Failure to clear support led to a strong bullish reaction

1. This bar is entirely below the previous swing low. It has cleared the swing low. 2. These bars overlap with the previous swing low. The price level is not cleared.

1. Good break-out distance above previous high.

A 1

2. Bar closed above

3. Price cleared previous high (resistance).

2. Bar closed above resistance

B 1. Decent breakout distance but shorter than the first

A

3. Did not clear resistance

C 1. Similar break-out distance with the previous tested high

B 1

2. Bar close below resistance

A 1

3. Did not clear resistance

1. Tested highs that could not close above resistance

2. Similarly weak tested lows

3. Strongest tested low that cleared support

3. Broke above last higher high; tested pivot becomes valid

1. Basic pivot 2. Fell below basic pivot and formed a tested pivot

Valid pivot low

Tested below and broke above

Valid pivot low

2. Formation of a valid pivot high changes the market bias from bullish to bearish

1. Valid pivot lows in a bullish market

3. A final burst of bullishness before the market plummets

1. Valid pivot highs in a bearish market 2. Break-out confirms valid pivot low; bullish market bias

3. Valid pivot lows

3. Valid pivot highs

2. This bar completed the valid pivot high; the first sign of a bearish bias

1. Valid pivot low in a bullish market

1. Good bullish momentum in a bullish market

2. Turning point where bearish momentum took over

3. Tested lows with weak momentum

4 3

2

1 1

1. Upwards slopping trend line broken here 2. 1st valid pivot high completed with this bar

1. No more valid lows

2. Price bounced off trend line but failed with an outside bar

Bull trend line

Valid pivot low

Latest valid low

Rotate trend line upwards

Latest valid low

Rotate trend line upwards again

1. Adjusted trend line

2. Resistance from trend line

1. Final bear trend line

3. Congestion between two trend lines

2. Trend line support

3. Trend resumed

2. Support again

1. Lower tails showed buying pressure

1. Powerful bearish thrust from top of trend

2. Strong support

3. Equally strong resistance

4. These bars cleared below the last swing low.

Price closed above, and cleared the previous pivot high.

1. Mature bear trend line

3. Congestion between two trend lines

Trend line bounce 2. Recent bull trend line

Recent bear trend line

2. Negligible momentum breaking bear trend line

Mature bull trend line 1. Strong momentum breaking bull trend line

Recent bear trend line

Mature bull trend line

2. But price rose up instead

1. Strong momentum breaking bull trend line

3. Too near to the bear trend line for taking long trades

5. Possible short setup

1. Solid bullish momentum 4. Trend line break with strong momentum 2. Bull trend line drawn with this valid low

2. Resistance from bear trend line 1. Bullish bias confirmed here

3. Limited upside due to bear trend line Valid low

3. Bullish momentum fading 1. Large down gap that caused price to move away from the trend line

2. First tested high had strong bullish momentum

4. Bearish momentum returning

Completely within the range of the preceding bar

Bar range

Inside Bar

Bar range

Closed within range; possible congestion

Broke out of range

1. Congestion started here

2. Congestion confirmed here

3. Broke out of range and ended congestion

3. Bullish break-out bar

1. Congestion started here

2. Congestion confirmed here

3. Bullish breakout that failed

1. Clear bearish momentum leading to trend line break 2. Three-bar congestion

1. Bear trend line broken

3. Congestion started after retest of trend line

2. Bull trend line drawn with this new valid low

4. Bearish break-out failed with bullish inside bar

2. Pressure Zone and Deceleration

4. Congestion Breakout Failure setup bar 3. Congestion at the top of the trend

1. Price moved far away from the bull trend line

1. First bar of the session gapped high above the bull trend line

4. Exceeded last extreme high and the trend line was adjusted to accommodate the pullback

3. First swing in the session to exhibit momentum

2. None of the tested lows showed momentum

5. Congestion Break-out Failure with trend line test

3. Congestion Breakout Failure resisted by the earlier congestion Earlier congestion

1. Strong show of momentum by the bears below the bull trend line

2. Six-bar congestion

1. Three-bar congestion

2. The eventual break-out

4. Traders who caught the break-out place break-even stops here to cover

3. Traders who missed the break-out intends to sell when the market gets back here

1. Congestion started here

Highest close

Lowest close

Merged Congestion Zone

Small gap in between the two congestion patterns

1. This bar clears above the Zone, and the Zone becomes a support. 2. Then, price clears below the Zone. The Zone becomes invalid as a support.

2. Price rises back within the Zone

Three-bar congestion 1. This bar clears below the Zone

3. Place sell stop order below this bearish bar

2. Then, price clears above the Zone, and the Zone is no longer a valid resistance.

1. This bar clears below the Zone, confirming the Zone as a resistance.

3. But the Zone is still a valid support, until price clears below it.

1. Congestion Zone projected from here

4. First sign of weak bullish momentum A 1

2. First test of zone had strong bullish momentum

B 1

C 1

3. Good bullish momentum persisting

B 1

C 1

3. Setup bar

1. A smaller congestion zone 2. This bar cleared the below Congestion Zone, confirming it as a resistance.

3. Bearish Congestion Zone setup

2. Display of bearish momentum below trend line confirmed bias change 1. Original bullish market bias

3. First Congestion Zone setup

1. Overlapping Congestion Zones

2. Basic pivot low above Congestion Zone

4. A better Congestion Zone setup

2. Strong break of bearish trend line

3. Long Congestion Zone setup with trend line tests

1. Overlapping Congestion Zones

4. Bullish Pressure Zone

2. Bull thrust only managed to close above last swing high but did not clear it 5. Short Congestion Zone setup

1. Bearish momentum 3. Overlapping Congestion Zones

4. Clear breakaway from Congestion Zone

Body takes up more than half the candlestick. Body is less than half the candlestick.

Trend Bar

Trend Bar

3. Bullish bar rose above the previous bar high to trigger the trade.

1. Bullish momentum rising above trend line

2. Bear trend bar failed as market found support at the bull trend line

1. Support from valid lows 2. Bear trend bar 3. Bullish reversal bar

2. 1st Trend Bar Failure as market retested trend line

4. 2nd Trend Bar Failure with a Congestion Zone

1. Broke trend line and previous lows with strong momentum 3. Congestion area acting as resistance

2. Bear trend line drawn with new valid high; change of bias

1. Market was bullish

3. Strong bullish momentum cast doubt on bearish bias

4. Trend Bar Failure setup in congestion

1. Firm bearish momentum

2. Failure of bullish trend bar

C 1 B 1

A 1 Limit Line A>B>C

2. Setup bar (not triggered) Limit Line

1. Last bar of a bullish Deceleration pattern 3. This bar cleared the limit line; Setup becomes invalid

3. Second setup bar also completed a bearish Pressure Zone

2. First setup bar not triggered

1. Outside bar broke trend line but upswing could not reach last swing high

1. Congestion Zone

2. Trend line break did not exhibit momentum

3. Long Deceleration setup bar

2. Price cleared above the Congestion Zone 1. Congestion Zone

3. Decelerating as the market returned to test the Congestion Zone

4. Setup bar

1. Strong five-bar thrust to test the trend line 2. Second down thrust formed a Deceleration pattern

3. Did not clear the last pivot low 4. Bullish Pressure Zone

1. Strong bullish momentum

2. Bears wrestled back control

5. Resisted by Congestion Zone

4. Bullish momentum with Deceleration

3. Could not close below last extreme low

Hammer

Inverted Hammer

1. Congestion after first bar of the session

4. Bullish pressure zone

2. First valid low of the session

3. Anti-climax supported by trend line and the Congestion Zone

1. Extremely strong break of a bull trend line

4. Anti-climax setup bar

2. First sign of bullish momentum

3. Bearish momentum took back the control immediately

1. Strong break of bull trend line

3. Could not close above the last basic high 4. Second try to move above the resistance ended with a bearish outside bar

2. Five-bar up thrust ending with an Anti-climax

5. Bullish Anti-climax as a possible exit

1. Shorted here

3. Market shot up after the bullish Anti-climax

2. Covered at this price after a bullish Anti-climax

1. Price has gapped far above the bull trend line

2. First tested low ended with a congestion pattern

3. Anti-climax setup bar

Stage One New bar

Stage Two Along the way

Stage Three Resulting bar

1. Sold here 2. Bought here

4. Bought here

3. Sold here

Selling pressure Buying pressure

Pressure Zone

Only 1 tick

Not a reliable Pressure Zone

2. Place a buy stop order here

1. Bullish Pressure Zone

3. If price clears below this line, the setup is invalid.

1. Seventh consecutive bullish bar

4. Bullish Pressure Zone

2. Weak tested low

3. Congestion Zone

First bar of this session

3. Bullish setup bar rejected from Pressure Zone and bull trend line

1. Congestion Zone from previous session

2. Bullish Pressure Zone

1. Bearish Pressure Zone setup bar

2. Bullish Anti-climax and Pressure Zone

3. Bearish Deceleration and Pressure Zone setup bar 4. Crude oil inventory report released here

2. First bearish Pressure Zone with outside bar as 3. Second Pressure Zone (resistance from setup bar Congestion Zone)

1. Rejection from broken bull trend line confirmed bearish bias

2. Bearish Pressure Zone

3. Setup bar 1. Bullish market bias

Stop-loss

Entry Anxiety Zone

2. The break of its high was the nudge that tipped the balance.

1. Bullish bar within Anxiety Zone

3. Project an Anxiety Zone from high and low of the triggered setup bar

1. Bearish Anti-climax

2. Short setup bar triggered

3. Setup bar triggered

1. Bullish Anti-climax 2. Bullish Pressure Zone

4. Project an Anxiety Zone from the high and low of the triggered setup bar

1. Bearish Pressure Zone

3. If price crosses this level, the Zone becomes invalid as well.

Anxiety Zone

2. This bar cleared below the Zone, making it invalid.

2. This bar cleared above the Zone, making it invalid.

Anxiety Zone

1. Bullish Anticlimax

3. If price crosses this level, the Zone becomes invalid as well.

1. Bullish Anxiety Zone

3. Place a buy stop order at the high of this bar

4. Cancel the order if it is not triggered by this bar 2. Bullish bar overlapping with the Anxiety Zone (setup bar)

2. First serious attempt to rise was rejected

4. Bullish Pressure Zone entry bar 5. Bearish setup bar in Anxiety Zone

1. Gapped down and cleared last pivot low for two bars

3. Bullish Pressure Zone against the trend

3. Bearish Pressure Zone

5. First setup bar not triggered

2. Price continued the bull trend with momentum.

4. Bullish Anxiety Zone

1. The market tried to reverse this bullish Pin Bar for 11 bars but failed.

6. Second setup bar triggered

2. Bearish Marubozu trapped bears and formed Anxiety Zone.

1. Bearish Anti-climax 4. Bullish setup bar 3. These two bars freaked out traders who went short.

3. Anxiety Zone based on bearish Anti-climax setup

2. Pushing the trend higher with momentum 5. Second setup bar which also completed a bullish Pressure Zone 1. Tested low did not clear the last swing low.

4. First setup bar

Trend line tests

Congestion Zones

Bullish Pressure Zone

Outside bar as setup bar

Second setup bar

Long Pressure Zone setup with trend line support

3. Bullish setup bar not triggered 4. Bar cleared below limit line, implying a bearish bias

1. Bullish Anti-climax

2. Limit line

3. Bullish setup bar implied bullish bias here

1. Bullish Pressure Zone

2. Bearish setup bar implied bullish bias here

2. Long Congestion Break-out Failure setup bar

3. Limit line of Bullish Anti-climax 1. Original bullish bias

5. Short Congestion Zone setup

4. This bar signalled the failure of both long setups.

1. Price has moved far below the bear trend line.

2. Bullish Deceleration

4. Ignored two bearish Decelerations

3. Signalled success of bullish Deceleration

5. Failure of the 1st bearish Deceleration

6. Long Congestion Break-out Failure Setup

3. Failed bearish Pressure Zone

4. Successful bearish Anti-Climax

1. Failed bearish Anti-climax

2. Bullish Congestion Break-out Failure setup

1. The bearish Anti-climax referred to in Figure 10-9

2. Turned out to be the beginning of a down trend

3. Successful bearish Pressure Zone

1. Pushed below last swing low with momentum 2. Failed bullish Deceleration

1. Bearish Pressure Zone

4. This bar cleared above the setup bar, indicating a setup failure that prevented re-entry.

3. Projected from the high of the short setup bar 2. Bearish bar as setup bar

2. Long setup bar

3. Projected from the high of the long setup bar

4. This bar cleared above the setup bar and the setup was considered successful. 1. Bullish Pressure Zone

5. Do not look for re-entry after stop-loss was hit

2. Original setup bar 5. Re-entry setup bar (bullish bar)

3. Low of original setup bar 1. Four-bar Deceleration that ended with a bullish Pressure Zone

4. Clear buying pressure

1. Short Congestion Break-out Failure setup with bearish Deceleration

3. Stopped out by the entry bar

2. Original setup bar

5. More possible re-entries

4. Re-entry setup bar (bearish bar)

2. Original setup bar (skipped)

4. Re-entry setup bar (bought here)

1. Bullish Deceleration

3. Traders who entered with the first setup bar got stopped out here.

2. But none of the tested highs showed strong momentum

3. Bullish Anti-climax with support from Congestion Zone

4. Re-entry setup bar 1. Broke above trend line and made a basic low above the trend line

Original entry Timing Problem

Stopped out st

1 re-entry Stopped out 2

nd

re-entry

Stopped out 3 And so on…

rd

re-entry Market Bias Problem

Setups that did not reach our targets

Assuming that we targeted the amount equal to the trade risk each time, 6 out of 8 entries using the simple two-bar reversals hit their targets.

Weak up thrust

Horizontal shape

1. Congestion Zone projected from a five-bar congestion pattern 5. Highly probable target 3. Massive congestion

4. 5th rejection from the Congestion Zone (buy) 2. Bear trend line drawn after this bar made a new market low

1. Session has been plummeting

3. Bearish Deceleration?

2. After bouncing above the bull trend line twice, the market broke it decisively.

Equal highs do not fit definition.

High of this bar should be higher

Target (33.3%)

20 ticks

Entry price 10 ticks Stop-loss (66.6%)

Positive Expectancy

Negative Expectancy

2. Stop-loss order almost hit 3. Bearish Pressure Zone

4. Trailed stop-loss here 1. Bearish Congestion Break-out Failure; shorted here

D 1

1. Closing above bullish wide range bars C 1 B 1

A 1 B 1

D 1 C 1

3. When price closes above these bars, the stop-loss can be adjusted higher again

2. And their corresponding trailing stop-loss level A 1

1. First trail A 1

3. Choose the tightest stop-loss option B 1

A 1

2. This bar was the first close below four bearish wide range bar

B 1

1. Bearish Anti-climax in a bull trend

4. Using pivot lows for trailing stop-losses is the right way 2. Long Anxiety Zone setup bar

3. If we moved the stop-loss to breakeven without an analytical basis, we would be stopped out here.

3. Measured move target based on this thrust

4. Sold here with a limit order

2. Bought here 1. Long Congestion Break-out Failure

2. The market continued to rise.

1. We exited here.

1. Short Pressure Zone setup bar

4. Low of previous session

2. Previous extreme low

3. Merged Congestion Zone 5. Session low two sessions ago

Highest opening price 1. Nine-bar bearish thrust 2. Measure distance between

Lowest closing price

3. Project the same distance

4. Projected target hit here

3 solid lines are the projected targets

2. Short Congestion Breakout Failure setup bar

1. Price broke below the last swing low and the bull trend line with momentum

3. Bullish Anti-climax

2. Starting point of last bull trend line

1. Shorted here

Tested low Valid low 3. Bullish Anti-climax was the second test of the valid low

1. The same short Congestion Zone setup

3. See how the market flew

2. Congestion within congestion

1. Bear trend line drawn with this valid high 2. Bearish Deceleration setup bar with resistance from Congestion Zone, trend line, and last basic pivot

3. Congestion Zone projected from many sessions ago.

4. New Congestion Zones were a clear signal to cover our shorts.

1. Shorted with this bar

3. The market cleared above the Merge Congestion Zone

2. Covered here

4. Tested Merged Congestion Zone twice and rose sharply

3. Two-bar thrust projection

2. Last extreme high

4. Another bullish Pressure Zone 1. Long Pressure Zone setup

2. Congestion Zone

3. Two-bar thrust projection

1. Long Pressure Zone setup

3. Tested pivot high

2. Basic pivot high

1. Bullish Anti-climax

Tested pivot high

2. Target projected from three-bar thrust

Basic pivot high

1. Bullish Anti-climax

3. Target projected from four-bar thrust

4. Four major resistance areas above

3. Projected target with six-bar thrust

2. Confluence of Congestion Zone, resistance level, and last extreme high

1. Long Pressure Zone setup bar

4. Price reversed right below the lowest resistance

3. Projected target hit 2. Price pushed through the Congestion Zone with ease

1. Long Pressure Zone setup bar

2. There was a 40% chance that the market will reach this target before hitting our stop-loss order. 4. Target was above the R2R projection

3. R2R projected minimum target

1. Bullish setup bar

2. There was a 40% chance that the market will reach this target before hitting our stop-loss order.

3. R2R projected minimum target

4. Target was below the R2R projection

1. Bullish setup bar

4. Price trapped between two trend lines; unclear bias 2. Strong bull thrust warning against taking short positions

1. Gap open below bear trend line

5. Bearish momentum below bull trend line; bearish turn

3. First valid low

6. Five bullish bars did not reach last pivot high.

1. Congestion Zone and bear trend line acting as resistance

2. Bearish Pressure Zone

3. Setup bar implying trade risk of 9 ticks

2. Valid low (33)

3. Session low (87)

1. Tested low (27)

2. Strong bull thrust might be a sign that the bias has changed to bullish

1. Gap open below bear trend line

3. First tested low showed relatively weak momentum

6. With this new high, the bull trend line was adjusted to the shallower solid line

5. Bear trend line acted as resistance for a while before breaking

4. Valid low that allowed us to draw the dotted bull trend line

2. This bar did not clear above the Congestion Zone.

1. Three-bar congestion pattern

3. Confluence of support from Congestion Zone and bull trend line

4. Target projected from bullish thrust 2. Last valid high 1. High of session

3. Most powerful thrust of the session with consecutive bull trend bars

3. Intended profit target level

2. Minimum required target level

1. Setup bar

1. With this valid high from last session, we drew this bear trend line

4. But there was no bullish momentum 5. First bar of this session gapped up and fell rapidly

2. Bear trend line broken here

3. Pivot lows formed above the trend line

6. With this new low, we adjusted the bear trend line

First bar of the session

Support from last swing low

Last extreme low

First up bar

First bar of the session 2. Bearish Anticlimax rising into a Congestion Zone

1. Congestion Zone

3. Setup bar

1. Short setup bar

2. Current session low

4. Congestion Zone

3. Valid low

5. Targets projected from down thrusts

1. Great down thrust for projecting bearish target

Short setup bar 3. Less ideal thrust

2. Projected target with first thrust 4. Second projected target within Congestion Zone

2. Minimum required target level

3. Intended profit target level

1. Setup bar

1. Re-entry setup bar 2. Required target level

3. Intended profit target level

1. Bar gapped above the bear trend line from last session; started with bullish bias

2. Bearish momentum might reverse the bias but none came.

3. This bar confirmed the first valid low of the session.

4. Then, we could draw this bull trend line.

1. Selling pressure

2. First trend line break lacked momentum

3. The attempt to continue the bullish trend was rejected by a bearish outside bar. Note the fivebar down thrust and the bearish momentum.

1. Congestion Zone (dotted box)

2. Bearish Pressure Zones (solid boxes)

3. Short setup bar for two bearish Pressure Zones and a Congestion Zone

2. Intended short setup bar

1. Seven-bar congestion pattern

3. The market still seemed stuck within this larger Congestion Zone.

1. Valid low 2. Current session low 5. Target projected with five-bar down thrust 3. Congestion Zone from last session

4. Low of last session

1. Setup bar 4. Breakeven stop hit

2. Target hit

3. Warnings to exit

2. Shallow bear trend line from last session

1. First bar of the session opened with a gap past the last swing low

3. Congestion around low of last session 4. Price continued to fall, confirming the valid swing high

1. Steep trend line from Figure 5-33

4. Price has not reached the last valid high.

3. Tested high could not even close above the last swing high

2. Four-bar up thrust broke trend line but did not test the last swing high

1. Congestion Zone

3. Second Congestion Zone setup (Re-entry) 2. Short Congestion Zone setup

3. Re-entry setup bar (not triggered)

1. Short setup bar

2. Current session low 3. Merged Congestion Zone from two sessions ago 4. Another Congestion Zone 5. Low of two sessions ago

2. This five-bar bullish thrust showed great momentum. 1. This bar made a new high and we adjusted the trend line (from black to blue).

2. Bearish Pressure Zone as the basis for a long Anxiety Zone setup.

3. Instead of falling, the market formed a bullish Pressure Zone. 1. A successful long Trend Bar Failure setup

2. Congestion Zone from the previous session

1. Target projected from the five-bar bull thrust

3. Target projected from the three-bar thrust

3. Intended profit target level 2. Required target level for positive expectancy

1. Setup bar

3. Target hit

1. Setup bar

2. Market made a strong down thrust.

1. Bear trend line from previous session

2. First bar of current session

3. First swing of the day continued bearish momentum

2. Short Anxiety Zone setup bar

1. Bearish Anxiety Zone

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