ROSS HOOKS OCCURS ONLY IN TRENDING MARKETS. There are plenty of „pointy“ places on a bar chart, but not all of them are Ross hooks. It is essential to your trading them that you understand this.
Those hooks which occur in trending markets will remain as valid hooks. Often, they may be taken out more than once.
Now, let's look at the difference between a Ross hook and any other „pointy“ places in a market. Remember, they can occur only after the trend has begun.
I have purposely chosen a chart with some very difficult areas to define. Each letter labeling a particular price bar was placed there because at the time that bar was made, it was a pointy place on the chart.
The lines drawn connect either a high or a low to a correction. The pointy places were either local highs or local lows at the time they were made.
We begin two bars prior to point „A,“ which was a pointy place on the chart. It was not a Ross hook. Why? Because until point „A“ would have been taken out by prices, there would be no trend.
Point 17B" would have constituted a Reverse Ross hook had the uptrend begun at trie time it was made. Since there is, also no downtrend in effect, point „B“ cannot be considered a regular Ross hook. In other words, had there been an uptrend in effect, „B“ would have been a reverse hook. Had there been a downtrend in effect, „B“ would have been a regular Ross hook. As is, „B“ was neither.
Point „C“ was a Ross hook. Why? Because it was made after the trend had begun by virtue of the move up, the correction bar, and the taking out of point „A“. If point „C“ would be taken out by price in an uptrend, we would want to be a buyer, preferably using the Trader's Trick entry to get in early.
Point „D“ was not a Reverse Ross hook. Why? Because it was made while the market was in congestion. The congestion was in effect when bars „A“-„D“ gave three closes and an open all within the trading range of the bar preceding bar „A“. Point „D“ is especially important because it, together with point „B,“ constitute a double support point. If Point „D“ is taken out, it would be a significant event worthy of notice.
Point „E“ was a Ross hook. Why? It was made in a downtrend, if it would ever be taken out, we would want to be a seller.
Point „F“ was not a Ross hook. Why? Because until prices would have taken it out, there was no uptrend in effect. Point „F“ was like point „A“.
Point „G“ was not a Ross hook. Why? Because it did not occur in a trend. If point „G“ were to be taken out, a trend would be in effect. Until then, it was simply the flip-side of points „A“ and „F“. Point „G“ was the equivalent of point „B“. However, point „G“ was important because it gave a connecting point from point „E“.
Point „H“ was a Ross hook. Why? It occurred in a defined trend. Once point „F“ was taken out, the trend was, by definition, in effect.
Please note that as prices moved toward point H, the hook at point С was taken out. We would have wanted to be in the market at or before the breakout.
Point „I“ was a Reverse Ross hook. Why? Because it was made in a trending market, in this case an uptrend. The trend was put in effect when the bar preceding bar „H“ took out the high at point „F“. If point „I“ were to be taken out, we would want to go short. It also gave us a connecting point from point „G.“
Point „J“ was a Ross hook. Why? It was made in a defined uptrend. The trend was put into effect at the taking out of point „F“.
Point „К“ was э Reverse Ross hook. Why? It was made in a defined trend, in this case an uptrend. It also gave us a connecting point from point „I.“
Point „L“ started out as a potential Ross hook. Why? Because it was made in an uptrend. Point „L“, together with point „J“, constitute an important double resistance point. If they are ever taken out in an uptrend, we would want to be long. Double resistence hooks and double support hooks are treated the same as single pointed hooks. Taking them out is a tradable event. However, subsequently point „L's“ status as a Ross hook is nullified when it becomes part of a four bar congestion beginning with the bar after „J.“ If a bar that would ordinariJy make a hook is also the fourth bar qualifying for congestion, the congestion takes precedence and you do not have a hook. In this case „L“ is nullified. „J“ remains as the Ross hook.
Point „M“ was not a Ross hook. Why? Because it was not made in a trend.
Point „N“ was not a Ross hook. Why? Because it was the sixth bar of a congestion area. However, point „N“ was important because it gave a connecting point from point „L.“
Point „P“ was not a Ross hook. Why? Because it was the ninth bar of a congestion area. However, point „P“ was important because it gave a connecting point from point „N“.
Point „Q“ was a Ross hook. Why? Because it was made in a defined downtrend. The taking out of point „O“ established the trend.
Point „O“ was not a Ross hook. Why? Because it was the seventh bar of a congestion area.
Point „R“ was not a Ross hook. Why? Because it was not made in a defined uptrend. Point „R“ is like point „A“.
Point „S“ made a higher high, taking out the high of the previous day. That gave a connecting point from point „R“.
Point „T“ is a Ross hook. Why? Because it was made in a defined downtrend.
