Knowing when prices are about to break out

Here are two ways to know when prices are getting ready to break out from a trading range.

When prices are in a trading range, count the number of closes above or below a specific price near the vertical mid-level of the trading range. If 70% of the closes are above the mid-level price, and the market cannot rally and close above reaction highs, a severe correction may be imminent. If a market breaks and cannot close below reaction lows, then expect a rally to carry prices above the reaction highs. E.g. Let’s assume that a futures chart is showing that about 90% of the Closes are above 445.00, yet prices cannot Close above 455.00. If prices finally do Close above 455.00, a powerful buy signal would then be in place.

Another way to determine that prices are about to break out of a trading range is to note if you have a 1-2-3 followed by a Ross hook within the trading range. If both are present, the percentages favor a breakout to follow, and entry by way of a TTE is acceptable.

A 1-2-3 formation followed by a Ross hook is a consistent objective chart pattern for defining that a trend or swing is in process. Once the point of the Ross hook has been violated, this pattern is enough to establish that a trend or swing does exist.

Could you please supplement the theory with an appropriate chart?

good job Joe;

This is a Steve Nison technique I have used many times.
One thing I would add, IMHO, after we get the close
above/below the area you mentioned; I have noticed
a small move back in the opposite direction before
we continue in the direction of the signal (close)
not always, maby 90% of the time.

Hey Red,

I've read that about closes before and always assumed that were talking about daily bars.....what about intraday timeframes? I've heard some use the 5 minute close above or below a breakout point......I guess I'm just wondering if you have any tricks...or have read anything beyond the daily bars

I'm under the impression that Ross only does these posts to keep his name out on the forums without officially spamming so I'm not expecting any qualifications or clarity back from him. Of course proving me wrong would be a good thing!!

Bruce!!
Don't tell me Ross is SPQR Thanks for keeping me stright
I don't know these folks as well as you guys.

How's your baby girl I hope well


No, I don't have any tricks. I apply the same rules for a close
above/below any s/r area on any time frame. I don't expect big
moves on the smaller time frames.

She's doiing great Red and thanks for asking. Hard to believe she'll be a year old next month........time goes so fast....

I like Joe's work but it was pricey.....I think many of his manuals you can get online for free now....

Yeah, you can get them free online if you don't mind violating the Digital Millenium Copyright Act, at a hundred grand fine and six months in the slammer per download ([url]http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act[/url]),the NET Act, at $250K and five years per download ([url]http://en.wikipedia.org/wiki/NET_Act[/url]), and so on. Call me silly but I'm going to keep paying for everything I read after seeing the sentences they hand out to everyday people doing illegal downloads. If you were referring to legal downloads Joe is providing of his books (I didn't think he had any), then ignore this comment. I'm not trying to be a party pooper here, but I try to keep my major legal violations to a minimum :-) This doesn't even touch into the idea that most seem to not care one bit about, and that is that illegal downloads are outright stealing from the author. I'm not targeting you here, Bruce, just trying to get people to think about things that most do without any thought because 'everyone is doing it'.

I was refering to this site Jim

http://www.trading-naked.com/Articles_and_Reprints.htm

it would be a cool thread to discuss the moral and non- moral aspects of downloading......in my very simple world it should be the sites responsibility to police that....so if a file upload site allows material with copyrights on it then it is there problem...of course this view is coming from someone who does not officially have published work out on the net but I've supplied a hell of a lot of stuff for free..

in picking various random chapters of Joes work I didn't see a copyright on all the pages ..........I guess authors need to get up to speed also in this arena.......so where is Joe anyway...? at least he could have the decency to come back and answers questions to the posts he makes......perhaps he intended to give us this free stuff....Hey Joe???? R U out there??


I'm no lawyer, can barely spell most days but he should get his copyright notice on all pages......as I did find one that had a notice

Well, the curious thing, Bruce, about copyright is that you don't have to put that little copyright © on there, or even say it is copyrighted. The minute anyone types something on their computer, or writes it on a paper notepad, it's copyrighted to that person, from everything I've read. The reason it is suggested that one put the notice on their work is just to tell people who don't understand copyright to respect existing copyright laws.

The real issue is 'proof' of when you wrote something. So, say someone takes someone else's work and says it's theirs. The courts then look at the evidence to see who can show they created the work, such as computer records, first publication or posting somewhere, and so on.

One thing many do is file with the copyright office, which does not give anyone rights to anything, it simply puts a copy of the work on an 'official' record for that date, so in the event of a dispute, at least that much is available towards the resolution of the dispute. Keep in mind I am not a copyright attorney, and all of what I have just said is simply my understanding based on what I've been told or what I've read, and it could be inaccurate.

Sorry, I just realized this is getting a bit far off topic here, I just wanted to address the point at hand. As Bruce says, if we want to debate some of this philosophy we can start another topic for that. Again, sorry to partially highjack this thread...

We finished the move to the upside in the globex session.

For those reading this for the first time, see the above post of clarity.