Page 12 - Futures Money Machine-Study Session #6

Bearish “Channel Breakout” Trade Rules::

Scan to locate opportunities for this set up and when you do, here are step-by-step

instructions on how to enter this trade on a Bearish trend.

• Identify the most recent area after a big trend up where prices are channeling. Preferable after the completion of a
recent bullish Wave 5 marking the end of that trend.

• The channel needs to be narrow and at least 20 price bars long. The longer and narrower the channel is, the better.
• Draw two horizontal lines, one marking the resistance at the top of the channel and one marking the support at the

bottom of the channel. This makes it easier to see the channel and notice visually when prices breakout of the channel.
• Set an alarm in your charting platform to alert you when prices break below the lower line of the channel and break out
below the support price level.

• When prices do break below the lower line of the channel, this is called also a “Channel Breakout”.
• Next, wait for a lower high and then lower low after the “Channel Breakout” before initiating a trade.

• The trade should be initiated when prices go above the second lower low. (Or if you use the ART® Trading Software by
TradersCoach.com® wait for a bearish Pyramid Trading Point® entry signal.)
• The price oscillator histogram (or OWL Indicator) needs to also be bearish for a short trade.

• Put your initial stop-loss below the lower high or if close enough at the high of the channel where the upper resistance
line is

• Trail your stops in subsequent lower highs which will represent new levels of price support on the bearish trend. (Or if
you use the ART® Trading Software by TradersCoach.com® wait for a Pyramid Trading Point® exit signal.)