Aleš’s Lessons #6 – We Got The Beat

Understand what happened here when the market got a small lift over the weekend from below the continuation level.

An automated re-visit of the top was put in place where the market makers would get extra help from those buying the gap fill / continuation level of 1.1005.

Price never got engaged with the upside: it stayed away from the upper gray limit line.

What is a beat? A failed break out over a recent price extreme.

Why is this happening? Because there are physical limitations to what a market can do without consolidation.

For instance, when the 4-H energy gets exhausted, I plot the “sell the beat of / buy the beat of” text as well as EU which stands for Exhaustion Up (Not European Union). The exhaustion level gets surpassed by the little extra distance the commuting mean would provide (inertia). The beat fails the exhaustion level by surpassing then coming back through it.

Primary Target is still 1.1024

These extremes always get a re-test that usually results in a small beat (see the prior one was 14.8 pips, this was 5.2). Can they expand on the size of the beat? Sometimes they do. Leave enough slack not to get stopped out.

I refer to fading the beat as Secondary entry while the exhaustion itself is the Primary entry. Since the Secondary is further out for the most part, it is the better location.

The exception to this beat was recently the higher low that defined that green-white trendline (I plot “missing beat” to highlight such event).

There it is – That’s where there isn’t! (The Missing B.)

Now, concentrate on Volatility Crush. You can see that after a 3-bar drop, you would get a counter move there is always a 2x-3x 4-hour slot when the beat should materialize.

I was trying to explain this volatility AC/DC motion to someone and told him, “if you understand this, you understand something about trading”.

Where are we at now? At the 60% comfort level. There is no unfinished business on the upside. A mean reversion may commence from here.

The title reference

Now the beat is 8.7 pips

Looking for the perfect beat?

The buy signal of the Stochastic Bars Stripy was spot on.