With this update i’d like to introduce a powerful concept, the “Ross Hook”. invented by Joe Ross, a trader and investor of over 50 years.
Ok but what is the ross hook? Well, the Ross Hook is a technical formation that occurs in trending markets where there is a failure of the market to make a new high in an uptrend or a new low in a downtrend. The Ross Hook must occur after a 1-2-3 trend reversal formation has taken place. As you can see on this 4h chart of btc/usd at MtGox in the last 5 days a 1-2-3 pattern formed with a first breakout labeled “RH” or Ross Hook.
Here the btc/usd failed to make a new low at the point “3” on the chart, then it has done a first strong breakout of point “2”, the first istance that failed to make a new high created the Ross Hook (labeled “RH” on the chart). If the market will go above the Ross Hook a trader might try to open a trade, in this case above ~7.3$; a breakout of 7.3$ would imply a temporary reverse in the short term.
For who is interested in this approach i recommend the book “Trading the Ross Hook”