Some textbook AGET False Bar setups with the ES on the 987T chart (my current favorite). Note: All charts are 987T charts on the ES in the central time zone.
Setup #1 (long): We have a false bar "long", so we are waiting for a pullback to buy. We see a stochastic pullback to the 50% line (blue arrow), then a new high with some signs of divergence in the osc. These are signs that we should expect a pullback soon. The next chart shows a prediction of where the pullback could go to.
Taking a measurement of the last pullback (left blue arrow), we take a fib extension from the latest high. We look for a stochastic pullback and an osc pullback. I personally find many 1.272 pullbacks, so I look heavily at this level. From the chart below you can see everything seemed to come together right at that point. An added bonus is that we have a short-term double bottom at this point (pivot at the bottom of the left arrow). This is our long entry point (878.50-878.25).
This is the result of that buy. The movement up contained 3 waves. The first wave up (left blue arrow) gave us an idea of where the target was for the final wave up (right blue arrow). A MOB off the previous pivot high comes together with the 1.618 level. We also are now overbought in the stochastic and have divergence in the oscillator. This is more confirmation to get out!
The movement ended up going higher, but capturing those 6 points is still a great trade. Trades like this are good examples when it's good to have a "runner". If you did have a runner, below are some potential targets for that runner.
Runner aside, a new False Bar long formed, so we patiently look for another pullback to buy. These targets are also estimates when we could start to see a pullback. We see price slowing as we start hitting these levels and see the oscillator falling as we keep hitting new highs, so that's a sign that the buying momentum is slowing.
Setup #2 (long): We estimate the distance of the pullback using one of the previous pullbacks (left blue arrow). Price hits the 1.272 level as the stochastic becomes oversold and the osc pulls back to the zero area. However, after a quick bounce, price decides to pullback to the 1.618 level. If you missed the first entry, this is a second chance to get in. This slight pullback is very close, so it wouldn't stop you out if you entered at 891.50. The stochastic is also showing signs of divergence (higher low) as price hits this new low, so this is another good sign of a long move.
Below are a couple targets for the buy based on the hight of the left blue arrow. The stochastic is overbought and there is much divergence in the osc, so this is definitely a good time to get out of the long. It's not shown in the chart, but the price hits the MOB right in this area as well. The divergence is so large in the Osc that we have a nice "Type 2" setup as well, if you are daring to go short.
Setup #3 (short): If you did short those levels, it would've worked out very nicely, hitting the 1.272 and 1.618 targets... and more. At this point we are definitely into "chop time", so being conservative on any open position is highly recommended.
Setup #3b (long): In the middle of that short setup, there was also FB long setup as we hit the 1.272 level (891.25) (see chart below). If we were short above, this long setup would be a good indication to be careful (tigher stops or conservative targets)! If you were good with money management, you could've made money on this ~4pt pop as well. This would be a bit more risky, since we are in chop time, there is a Type 2 short in play, and this up move is already extended.
Below is the same chart as above with a fork applied. Look how nicely price confirmed this fork on that pullback (circled spot)!
Good hunting traders!
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