How to use the J Hook Patterns in Trading
Often you get in an uptrend when trading and you just know that it is about to pull back or do a trend reversal. Thus the J Hook becomes your best friend.
Robert Hooke FRS was an English natural philosopher, architect and polymath. He originally discovered what became the J Hook pattern. He made contributions to human knowledge spanning Architecture, Astronomy, Biology, Chemistry, Physics, Surveying & Map Making, and the design and construction of scientific instruments.
The J-hook starts with a strong uptrend that produces stronger than normal returns in a short period of time. The J-hook provides some simple profitable applications. The first uptrend usually shows candlestick sell signals when the initial upmove comes to an end. You could confirm this with other indicators such as oscillators.
Suppose that small candlestick buy signals start to form after four bars. There is nothing wrong with buying back into the position, as the trade’s second entry now has clearly defined targets. The first target should be the of the recent high. Although it may not be a huge percentage return moving to that level, at least the probabilities indicate it should be profitable.
Here is a visual of the J Hook pattern. If you want more help get 7 free trading videos and 13 free trading lessons at our website, Futures Trading Secrets.com.
SOURCE: Futures Blog by Bill McCready – Read entire story here.