The
first pullback from a breakout has high odds of
rapidly ejecting in the direction of the new trend.
But watch the depth of the correction. If it breaks
through several minor support levels before
reversing, sellers will likely emerge when price
tests the short term high. This common scenario will
still produce good
trades. With enough reward between
your entry and the short-term high, you can place a
sell order 1/16th or 1/8th below the top and ride
the bounce into a quick fill. Use a 6-Out rule to
measure trend pullbacks. Start your count with the
first bar lower than the parabolic extension of the
trend. Watch for a pullback at the same angle as the
trend itself or in a tight sideways pattern. The
next trend leg should begin no later than the 6th
congestion bar.
