Recent Toby Crabel Price Pattern Setups in the E-mini S&P 500 Futures

 S&P 500 E-mini Futures (daily candles) - (1) - (2) - (3) - (4)

(1)   2BNR is the 2 Bar Narrow Range: If the 2-day-range (the higher of the 2 highs less the lower of the 2 lows) is the narrowest 2-day-range in the last 20 trading sessions then we are currently sitting on a 2BNR.
(2)   3BNR is the 3 Bar Narrow Range: If the 3-day-range (the higher of the 3 highs less the lower of the 3 lows) is the narrowest 3-day-range in the last 20 trading sessions then this is true.
(3)   » Next time you see an Outside Day with a down close lower than the previous day, don't get scared, get ready to buy ! «
(4) 4BNR and Inside Day with an Up-Close -  narrowest weekly range of last 7 ... weekly directional change already due? ... or early September?

Reference:
Toby Crabel (1990) - 2-Bar Narrow Range Setup.
Toby Crabel (1990) - The Principle of Contraction/Expansion.
Toby Crabel (1990) - Definition of Price Patterns.
Larry Williams (1998) - Outside Bar Trading Setups.

Larry Williams (1995) - An Outside Look at Inside Days.

D'onte Goodridge (2022) - Interbank Price Delivery Algorithm (IPDA) Data Ranges.

D'onte Goodridge (2023) - Structural Characteristics of Bullish & Bearish Months.

TPR (July 25, 2024) - Cosmic Cluster Days | August 2024.

Martin A. Armstrong (July 14, 2024) - Next weekly directional change during week of August 26.

MyPivots.com (2024) - Scanner for Toby Crabel Price Patterns in the E-mini S&P 500 Futures.

 

Structural Characteristics of Bullish & Bearish Months | D'onte Goodridge

Traders want to find trending markets but often fail to see and understand the structural characteristics of bullish and bearish months. Both move in a similar fashion but inverse to one another. Here are the characteristics for the formation of a bullish month:

 

 

The first example is a daily chart of US Dollar versus Japanese Yen (USDJPY) during February 2023. The market was trending up. It was a bullish month. Let's identify the five key factors to a bullish month:

1. Price moves below the monthly opening price.
2. A swing low forms below the month's open.
3. Price purges a previous daily low (PDL) and reverses back to a previous daily high (PDH).
4. The market creates a market structure shift (MSS) to the upside and an Imbalance or Fair Value Gap (FVG).
5. Higher swing highs and higher swing lows form.

 

Looking at the daily candles in the USDJPY chart, we see the methodical sequence of a Bullish Month developing:
 

1. Price was movesg below the monthly opening price. Price stops below it, runs up, drops below it, runs up and continues the bullish trend.
2. A swing low below the month's open forms. This is a swing low because the candle on the left has a higher low and the candle on the right has a higher low, hence the low in the middle is the lowest point. To form a swing low  only takes three bars.
3. Price purges a previous low and works back to a previous high. The following day price reverses back to the previous daily high, all happening within a three bar setup, creating a swing low, which is a purge on the previous daily low and a reversal back to a previous daily high.
4. Next the market creates a shift to the upside with speed through a previous swing high and a FVG.
5. And price created a new swing high and a higher swing low.

The next example is a daily chart of Apple during January 2023. The same five criteria for a Bullish Month were met:

 

Now let's look at the five key factors to a Bearish Month:

1. Price moves above the monthly opening price.
2. A swing high forms above the month's open.
3. Price purges a previous daily high and reverses back to a previous daily low.
4. The market creates a shift to the downside and a FVG.
5. Lower swing highs and lower swing lows form.

 

The first example is a daily chart of British Pound versus US Dollar during August 2022. The market was trending down. Identify the above listed five criteria for the formation of a Bearish Month:

 

 

The last example is a daily chart of Gold during February 2023. Gold was in a down trend. Identify the structural criteria for the formation of a Bearish Month:

 

Reference:
D'onte Goodridge a.k.a. Forensic Forex (2023) - Characteristics of Bullish & Bearish Months. (video)  

 

 

 

See also:
Larry Williams (1998/2011) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

 Michael J. Huddleston (2017) - ICT Weekly Range Profiles.

Daye (2023) - The Quarterly Theory.

 

The Oops! Reversal Setup | Larry Williams

One of Larry Williams’ best-known setups is called Oops!: We are waiting for the market to open. We take as a reference the daily bar of yesterday, with its open, evolution and close. When the market opens, suppose a gap up occurs. A gap up takes place when the open is higher than the highest point that was reached on the previous day; a gap down occurs when the open is lower than the lowest traded point of the previous day.

When a market opens at a very high level and there is a gap up, it is very strong. So, we obviously suppose that it goes up. It will probably do it but, if for some reason it starts to fall and then reaches the highest level of yesterday, it is as if it said: "Oops!, I was wrong. I’m not strong, but weak." In this case, we open a short position at this level. We enter short because we imagine that the market (and the players in the market) realizes it isn’t that strong. Actually, the market is weak, so it will go down. 

To use this setup, we obviously need a stop-loss whose size depends on the market we are trading. How do we close this position? Larry Williams proposed a bailout exit he called "first profitable open". This consists in staying in the position until, on the following day or days, the market opens somewhere below the entry level (because we are short). When that happens, we close the trade. So, we keep the position until we get the profit or, obviously, when we are stopped out. We can also close the position at the end of the same day. The one suggested by Larry Williams is however the best one, although it sounds quite weird. Believe me, the first profitable open is a very effective close of the position.
 

This is the basic version of the Oops! Anyway, I know Larry Williams made some tweaks to it. The Oops! works, but today this specific setup is quite rare. The reason is that many markets trade for 23 hours a day now. So, it’s quite hard to have a heavy gap in just one hour. Maybe, you can have one after the weekend, but normally it’s not there.

Quoted from:
Andrea Unger (2017) - How to Trade Larry Williams’ Oops!

See also:
Larry Williams (1998/2011) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

Jarrod Goodwin (2023) - Trading Forex Gaps: Maximising Profits with Proven Techniques (Larry Williams “Oops!”). (video)

Buy & Sell Signals | Larry Williams

 Buy Signal: Dump, dump, (dump), go sideways and pump a bit, one more small dump, then the pump.

Sell Signal: Pump, pump, (pump), go sideways and drop a bit, one more small pump, then the dump.

»  If I've seen prices in a big downtrend, they move sideways, then drop again, but immediately come back up, back into that trading range, that's a buy signal. Why? Because during that trading range, there was accumulation going on. The fact that it broke down fills a lot of long positions. Professional money will buy there, and if it immediately comes back, then that nails it. They've been buying and I want to get long the market.  «

Quoted from:
Larry Williams (2016) - Buy Signal. (video)

 

See also:

Larry Williams (1998/2011) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

The Taylor Trading Technique | Scott Hoffman

In my opinion, George Douglass Taylor was one of the greatest trading thinkers, and luckily he left behind one book on trading: 'The Taylor Trading Technique' (1950). This book lays out his 'Taylor Book Method' for swing trading in futures. Taylor postulated that the markets had patterns based on "market engineering" from the "powers that be" in the grain markets. These insiders would frequently cause prices to decline to set up a buying opportunity for themselves. Then, after the market rallied sufficiently to yield profit for these insiders, a short-term top was created to give them a selling opportunity. The market would sell off, and the cycle would start again. 

 

George Douglass Taylor was a grain trader in the 1940s and 1950s at the CBOT pit
and is credited original author of the 3 Day Cycle Short-Term Trading System.

The effect of this engineering was to amplify the natural rhythm of the market, creating false moves that would fool traders into buying when they should be selling, and vice versa. The thrust of the Taylor Technique is to identify this rhythm and take advantage of the "false moves". I have long maintained that if an individual could identify moves in the market that would serve to inflict the most pain on unwary traders then they would have a great trading system. I believe the Taylor Technique does that. Taylor created this method for the grain futures markets, but I find it equally applicable in the financial futures markets today. 

 

George Douglass Taylor’s system of short-term swing trading is based on the premise that the market moves in two to three day timeframes, moving from a low to a high and back to a low. The other important concepts are the importance of the previous day’s high and low, the length of upswings relative to downswings, and being a solely technical trader (ignoring fundamentals).

Cycle Day #1 – Buy Day

The first day of the cycle is the buying day. Look for a Buy Day two days after a swing high (the highest high of the past few days). On a Buy Day, look for the market to make its lows first, finding support around yesterday’s low. If the market opens flat to higher, look to buy the first sell off towards the previous low. If the market trades under yesterday’s low, be careful about going home long. The market should close higher than where it opened. If it is making new lows late in the day, it is usually best to exit. You can often get in the next day at a better price.

 

Cycle Day #1 - Buy Day

Two-Day Rate Of Change = ROC(2) 

Generally, it’s good rule of thumb not to buy late in the day on a buy day if the market is heading lower or closing lower than where it opened. Odds favor a lower opening the next day, giving you a better enter price. Likewise, if the market is going to close lower than it opened, don’t be afraid to liquidate your position. Odds are in your favor that you’ll be able to buy at a lower price the next day.

Cycle Day #2 – Sell Day

If you are long and the market is closing in your favor, carry your long position overnight. Odds favor a higher opening the next day setting up the Sell Day, the second day of the cycle. On the Sell Day you should look to sell into strength, liquidating your position, and going home flat. Often, the sell day trades on both sides in what I call a 'fade' day. A fade day often follows a trend day and can be traded from either side.

 Cycle Day #2 - Sell Day

Cycle Day #3 – Sell Short Day

The third day of the cycle is the Sell Short Day. The Sell Short Day is the mirror image of the buying day. On a sell short day, you should be looking to sell early morning resistance, looking for resistance around the previous day’s high. The market should not be making highs late in the day, if it is you should be able to get a better entry point the next day. On a Sell Short Day, the market should close lower than it opened. The Sell Short Day is often followed by a 'Fade' day.

 

Cycle Day #3 - Sell Short Day.

That is the gist of Taylor’s technique - a rhythm of buy-sell-sell short. I don’t always recognize where we are in Taylor’s cycle (you’re always learning!), but on days when it is clear, at the least it gives you a good indication of the market’s bias for that day. In swing trading, the relation of the open to the close should indicate the direction of the next morning’s opening. This helps you determine whether the odds favor being a buyer or a seller on a given day.

Reference:

Scott Hoffman (2012) - Insights of a Swing Trader. (videos)

Scott Hoffman (2003) - Swing Traders Users Guide.

George Douglass Taylor (1950) - The Taylor Trading Technique.

 

See also:

Cameron Benson (2024) - The Complete 3 Day Cycle Short-Term Trading System.

Larry Williams (1998) - Swing Points as Trend Change Indication. 

Linda Bradford Raschke & Laurence A. Connors (1996) - Street Smarts: High Probability Short-Term Trading Strategies.

Swing Points as Trend Change Indication | Larry Williams

A trend change from up to down occurs when a short-term high is exceeded on the upside, a short-term trend change from down to up is identified by price going below the most recent short-term low. Figure 8.1 depicts such trend changes in a classic manner, study it well because reality comes next! Here are a couple of pointers on this technique. Although the penetration of one of these short-term highs, in a declining market, indicates a trend reversal to the upside, some penetrations are better than others.

 Figure 8.1 — Classic patterns of trend change.

» There are only two ways a short-term high or low is broken. «

 Figure 8.2 — Breaking a short-term high or low.

There are only two ways a short-term high or low is broken. In an up trending market, the low that is violated or fallen below will be either a low prior to making a new rally high, as shown at (A) in Figure 8.2, or a low that occurs after decline of a high that then rallies making a lower short-term high; it then declines below the low prior to the rally that failed to make a new high, as shown at (B). The better indication of a real trend change is the violation of the low shown at (A). By the same token, a trend reversal to the upside will occur in one of the two following patterns: In (A), the rally peak prior to a new low is violated to the upside, or in (B), the market makes a higher low, then rallies above the short-term high between those two lows. In this case, again, the (A) pattern is the better indication of a real trend reversal.

Figure 8.3 — T-bonds (15-minute bars)

With that in mind, look at Figure 8.3, which shows a 15-minute bar chart of the September Bonds in 1989. The major trend moves were adequately captured by this technique. [...] You can use this technique two ways. Some traders may simply buy long and sell short on these changes in trend. That's a basic simplistic approach.

Quoted from:
Larry Williams (2000) - Day Trade Futures Online.

An Outside Look at Inside Days | Larry Williams

First, lets define what constitutes an inside day. An Inside Day is exactly the opposite of an Outside Day. That is, today’s high is less than yesterday’s high and today’s low is greater than yesterday’s low. Hence the terminology inside day, as all of today’s price range or trading activity took place inside of yesterday’s range. An inside day is usually thought to be an indication of congestion. A price could not exceed the previous day on the upside nor could it break below the previous day’s low on the downside.

 » Inside Days are one of the most reliable forecasting patterns to occur in the marketplace. «

 

Chartists and authors have not paid very much attention to the inside days over the years. They have made note of them, but this is the first time, to my knowledge, that anyone has made a serious study of the impact of inside days. And, wouldn’t you just know it … inside days are one of the most reliable forecasting patterns to occur in the marketplace!

  » In a study of nine major commodities covering 50,692 trading sessions, I noted 3,892 inside days,

suggesting we will see these days appear about 7.6 percent of the time. «
Larry Williams, 1998.

There does seem to be some validity to this. The following chart shows what happens when we have an inside day with a down-close while prices are lower than they were 10 days ago. In the Standard and Poor’s, 71% of the time you were higher the next day. This may not even be as significant as the fact that 71% of the time you were higher 20 days after this occurrence. In the Value Line, price is higher 50% of the time after the occurrence, and in Treasury Bonds it’s higher 75% of the time. The pattern in Silver was not nearly as bullish, which surprises me because I had used this trading technique in Silver with some success … which just goes to show you! In Silver, on 36% of the time you were higher 20 days following the occurrence of the pattern. Soybeans were higher 57% of the time, Bellies 50% of the time and the Swiss Franc, where so far we have not found a pattern that forces prices higher, you were up only 22% of the time.

'Inside Days in the S&P 500' - Toby Crabel, 1990.

For a moment though, let’s take a look at just the occurrence of an inside day. What happens when we simply have an inside day with a down-close? Does that, on its own merit, forecast any significant market activity? The results are on the next few pages [of 'The Future Millionaire's Confidential Trading Course']. What can you find?

Then there’s the other side of this coin. What happens if we have an inside day with an up-close? Does this forecast positive action? It appears that it does to some extent. Study the tables for yourself. I have gone to the computer to give you the results for almost all possible configurations of the inside days. While, quite frankly, much of the data suggests random-gibberish-behavior, others are relationships that you can find and successfully trade with. What you need to focus on here is not that the patterns will always work for you, but that patterns, like methods, systems and tools, will give you the much needed odds that lead to successful speculation.

 

I have not exhausted all possible ways of looking at inside days with down-closes, though I have looked at the majority of the relationships one can study. There are others. As an example, what happens if the prices are higher, or if prices are lower following an inside day five days later. Does that mean that the down trend will continue? One could also ask the questions about an outside day following an inside day. Is this a particularly bullish pattern? (It is.) As you can see, your opportunity for research here is unlimited. If you have a computer, some data, and a desire to study the markets, here is fertile ground for you to come up with your own great ideas.

Quoted from:
Larry Williams (1995) - An Outside Look at Inside Days.

An excerpt from 'The Future Millionaire's Confidential Trading Course'.

 

See also:

Toby Crabel (1990) - Day Trading With Short Term Price Patterns and Opening Range Breakout. 

Toby Crabel (1990) - Inside Days in the S&P 500. 

Larry Williams (1998) - Long-Term Secrets to Short-Term Trading, 2nd Edition. 

Johnan Prathap (2011) - Three-Bar Inside Bar Pattern.

Outside Bar Trading Setups | Larry Williams

In his book, 'Long-Term Secrets to Short-Term Trading', 2nd Edition, Chapter 7, Larry Williams provides price action patterns to profit. Larry Williams says that there are two daily bars that most confuse retail traders, the Inside Bar and the Outside Bar: 

 

» What the public 'sees' on their charts as being negative is most often apt to be positive for short-term market moves and vice versa. A case in point is an outside day with a down close. The day's high is greater than the previous day's high and the low is lower than the previous day's low and the close is below the previous day's low. This looks bad, like the sky is indeed falling in. In fact, the books I have read say this is an excellent sell signal, that such a wild swing is a sign of a market reversal in favor of the direction of the close, in this case down. [..] The problem is these outside day patterns do not occur as often as we would like! The next time you see an outside day with a down close lower than the previous day, don't get scared, get ready to buy ! « 

After an Outside Day with a Down Close lower than the previous day, BUY!
After an Outside Day with an Up Close higher than the previous day, SELL!

An Outside Bar is a bar that broke the previous bar's high and the previous bar's low. For related trading setups Larry Williams specifically looked for outside bars on the daily time frame that closed below the previous daily low or closed above the previous daily high. After such a bar prints, a reversal in the price action should be expected. According to Larry Williams, Outside Bars only appear 7% of the time on the daily time frame.

This is what an outside bar with a down close looks like:

According to Larry Williams, this will be a buy set up in theory. Here we can see it looks bearish to the public eye because the close is below the low. This indeed can be a turning point. Enter long on the next daily open. The stop loss is below the low of the outside bar.
 
This is what an outside bar with an up close looks like:

 

This is a sell set up. It looks bullish to the public eye because the close is above the high. This indeed can be a turning point. Enter short on the next daily open. The stop loss is above the high of the outside bar. 

 
Targets should be logically related to buy side/sell side liquidity levels (previous highs and lows), Imbalances/Fair Value Gaps and/or 50% swing retracement levels. Consider only setups offering risk-to-reward ratios ≥ 1:2.

 

Don't expect every single Outside Bar setup to be a winner. Other setups and filters can nullify or optimize it (e.g. Oops Pattern, Smash Day, Day of the Week, trading in Premium or Discount, actual outside bar small range or large range, swing high or swing low recently broken, occurrence in 3 Day Cycle and 3 Week Cycle, close above/below 9-Day EMA, etc.). The video below shows Outside Bar Trading Setups on timeframes also smaller than the daily.

Reference:
Larry Williams (1998) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

D'onte Goodridge (February 2, 2023) - Outside Bar Model by Larry Williams. (video)

D'onte Goodridge (March 15, 2023) - Turning Points on the Higher Time Frame. (video)

Ali Casey (2022) - Larry Williams' Outside Day Strategy. (video)

US-Stock Market Seasonality - June Better in Election Years │ Jeff Hirsch

Over the last twenty-one years, the month of June has been a rather lackluster month for the market.

DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. NASDAQ and Russell 2000 have fared better logging average gains of 0.4% and 0.8% respectively. Historically the month has opened respectably, advancing on the first and second trading days. From there the market then drifted sideways and lower near or into negative territory just ahead of mid-month. From there the market rallied to create a mid-month bump that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.

 

In election years since 1950, June has followed a similar pattern to the recent 21-year period, but gains have been notably stronger, and all five indexes finish the month positive. Average June gains in election years range from 0.9% by DJIA to 1.9% by NASDAQ.

Quoted from:
Jeffrey A. Hirsch (June 1, 2024) - June Better in Election Years: Average Gains Range from 0.9% DJIA to 1.9% NASDAQ.

 

 

BofA - Historically, June-August is the 2nd best 3-month period for the S&P 500. 

In election years, it's the strongest.

BofA - It would not be surprising to see a bounce-back in the S&P 500 in early June, 

as historically, this period has demonstrated a trend of positive returns.

Goldman Sachs - Bullish mid-May through Labor Day. Choppy summer solstice to late July.

 

Solunar Rhythm in June 2024.

 

In Bull Markets, New Moons tend to be Bottoms, and Full Moons Tops. 

 In Bear Markets, New Moons tend to be Tops, and Full Moons Bottoms.

 

 The Quarterly Theory

 

 

See also:

Wayne Whaley (May 28, 2024) - During June the S&P 500 tends to be true to the trend.
Wayne Whaley (May 26, 2024) - Top Ten S&P 500 Seasonal Periods after a +5% January-May.

Martin Biber (May 16, 2024) - S&P 500 Cycles - Top May 25th [+/-] & Correction into Mid-June.

Michael J. Huddleston (2024) - ICT Seasonality.

Robert C. Miner (April 26, 2024) - The S&P and the Election Year Cycle.

Larry Williams (Dec 15, 2023) - 2024 US Stock Market Outlook.

Daye (2023) - The Quarterly Theory. 

The Three-Bar High/Low System | Larry Williams

At one point in my career, I had over 30 consecutive winning trades using this next short-term trading strategy. You will first have to calculate a 3-bar moving average of the high and a 3-bar moving average of the lows. (Each bar represents the time period displayed on your chart. Use 5-minute charts for lots of signal, or 15-minute charts if you want a little less hectic trading career.) This is automatically done on all quote machines, although “in the old days” I did it by hand. You can have the old days!

• You will first have to calculate a 3-bar moving average of the high and a 3-bar moving average of the lows.
• The strategy is to buy at the price of the 3-bar moving average of the lows — if the trend is positive, according to the swing point trend identification technique — and take profits at the 3-bar moving average of the highs.
• Sell signals are just the opposite. This means you will sell short at the 3-bar moving average of the highs and take profits at the 3-bar moving average of the lows. It is downright foolish to do this unless there is a reason to take only short sales. Our reason might well be that our swing point reversal system has told us the trend is down. Then, and only then, sell the high and cover at the lows.

Now let’s try to make some order out of all this.

 

 

Figure 9.5 shows the addition of the 3-bar mowing averages and the swing lines. I have marked the points where trend changes; we switch from buying the lows to shorting the highs following these reversals. The 3-bar high and low entry points are also shown. The game goes like this; trend reversal up so we buy the 3-bar low line and take profits at the 3-bar high and await a pullback to the 3-bar low. If the 3-bar low would create a trend reversal for selling, however, pass on the trade. Sells are just the opposite; await a trend reversal down, then sell all the 3-bar highs and take profits at the 3-bar lows.

 

Figure 9.6 has all the trend reversals marked off, so you can begin paper trading by looking for the buy and sell entries and exits. I suggest you walk through this chart to get a sense of how one can trade this very short-term approach. Note these are 15-minute bars, but the concept will work on 5-minute to 60-minute bars as well.

Quoted from:
Larry Williams (1999) - Long-Term Secrets to Short-Term Trading.