Question

What is the concept of two legged bar in trading?

Answer 1

Many price action traders claim that two-legged pullbacks are the most reliable trade setups. The variant we are reviewing today is from Al Brooks, who wrote three tomes on price action trading. These three books are not an easy read, but are extremely informative for price action traders.

In his books, he identified a two-legged pullback to the moving average as one of the best trade setups when there is a strong trend.

Before we start, let’s have a basic explanation of counting legs. Any bar that goes higher than the previous bar starts a new leg up. Any bar that goes lower than the previous bar starts a new leg down.