This week – 11 to 15 Feb – was not great for profits but it was fantastic for finding new setups and developing PA reading skills. The observations here lead me to develop the Bird in Flight PA sequence and more specifically, the Hits-Corrects-Breaks TL entry.

This happens so often: a compression just before a level (in this case a TL and the ex-gap), which includes a near miss of the level which is rejected – perhaps designed to tempt impatient traders into the market – and then after a small maove away from the level, a sudden move into it and below – presumably stopping all the entries out.

Te first compression is the bird’s left wing, the dip down to the level is its tail and the compression after the level is hit is the right hand wing. A break up the compression on te right hand wing, means that the move off the KL has some MOM and it’s time to get on board. A break of the right hand wing suggests that the bounce has no legs and is just a corrective bounce which presents an opportinity to trade in the direction of the move into the level.

This cart shows how the PA – in this case- can also be read as a Broken Triangle Rervsal and works on the same principle. In this case, the move down had only one purpose: to fill the ex gap and the compressions either side is te order flow that represents the temporary indecisison over whether this is a real move or a gap filling move.

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