The Triangle Breakout Failure or OOPS can take a variety of forms. The key is that traders have recognized that the triangle pattern exists and they have had time to act on it, thereby getting in the wrong way. It can't be too subtle. All the same reasoning applies as with the Head & Shoulders Failure.

"FADING POPULARITY" OR "THE VULTURES DELIGHT":

In the early 90s, when Candlestick charting was new in the U.S. and aggressively promoted, I had a studious client call me whenever the strongest of the Candlestick signals occurred. I never took any of the signals. I simply asked him, as a dedicated devotee of Candlestick patterns, when his Directional signal would indicate that he was wrong. That was my Directional signal. Soon he understood what I had been trying to teach him about how powerful Failures can be.

THE RAILROAD TRACK

This is a top notch Directional signal that can occur in any Time Frame. Its wide applicability is likely responsible for the glowing comments from my clients. It's as easy as it gets to apply and profit from, with a minimum of effort. For those of you who have studied Steidlmayer's work 2 , the Market Profile®, and understand "rejection of price," the underlying concept of why this works will be apparent. To those of you who are unfamiliar with these concepts, just imagine a half a dozen ocean-front homes in Santa Barbara, California suddenly going up for sale at $100,000 each. Boom, they're gone. Professional investors and Realtors snap them up and the price is back to the more normal range, perhaps higher since overhanging supply is now absent.

The idealized Chart 6-21 depicts a typical Railroad Track. With the extensions down as shown, we would expect a strong up move. Notice how the extended two bars are out of close proximity with the others bars. We call this "Railroad Tracks in the country", i.e. nice, scenic, and pleasant. Railroad tracks in the city are congested, unhappy events, potentially dangerous to cross, smoggy, and unsightly. As futures traders, what we want is space around the Railroad Tracks we select to trade. For rejection of price, we need price that is not common.

The Railroad Track (RRT) can take place in any Time Frame, from five minute to yearly. It is one of two directional signals which allows you to adjust the Time Frame to any desired amount. In other words, you may cause the data to fit into our perception of usability, by adjusting the Time Frame. So, let's imagine some variations that will all work, since they all represent the same phenomenon.

So, how do we play it?

These events can be so powerful that some of you will choose to enter "at the market" once the RRT is established, while others will choose a Fib retracement level for entry, as described later in this book. You will know you are wrong if the RRT returns to its extreme in price. It would be advisable to have a stop in excess of the .618 retracement, the '*' Fibnode. It would be nice ifyou could enter on a .382 retracement ofthe move up, after point R (recognition) is achieved, but often the continuation movement is too powerful. You will likely need to employ the more advanced methods covered later. I will typically stop myself in (initiating positions) against any extension ofthe extreme of the move after point R, while also attempting to position myself on a shallow retracement

level. If I'm filled on both orders that's fine. If I just get the initiating buy stop, that's okay too.

In the following 30 minute chart of U.S. Treasury bond futures, we can see a Railroad Track extending up to 11525. We know it's a RRT when subsequently the market returns to where the extension started, approximately 11508. That's the point of recognition (R). Note the flat tops at 11514. They show a large overhead supply. This is our sell point. We can also initiate sell stops at the 11508 level in case we're not filled at the retracement sell, or if we want to double up. This is a 30 minute chart. We don't want to be married to the position. We take a quick Fibonacci profit level (OP) near the low at 11428. If the higher Time Frame trends (not shown) were in a sell mode, we might want to stick around for bigger profits, or possibly hit it again on a retracement back toward the extension high. Based on the intraday RRT shown however, this was a nice "safe" trade that allowed us to book some nice "safe" profits. I like taking profits. So should you.

The corn futures chart below shows two RRTs. It was constructed outside of our "normal" Time Frames (see CHAPTER 2) to show you that we can "play" with the Time Frame selection to achieve the look of a RRT if it is not immediately apparent. This is what I mean when I say we can act on this signal in any Time Frame.

Note how the close of the second bar of RRT 1 bounced back from the extreme low, the point of recognition. Buried in the lower Time Frame action is the retracement we're looking for as our short entry.

RRT 2 was effective, but the contract was so close to expiration we'd have to look at the continuation chart or distant contracts for confirmation ofthis signal. Unless we were a commercial acting in the cash market, we would obviously trade on the signal in a more distant month than the one shown on this chart.

Like many of the Directional Indicators I've given you, I'm aggressive about my entry technique when the pattern develops. It is very dangerous, a prohibition in fact, to anticipate this particular signal. The reasons will be clear when we cover the more advanced Fibonacci techniques.

As a point of interest, I learned about this signal back in 1988 when I was long the S&P. A rumor about Vice President George Bush, fooling around on Barbara hit the market. When the rumor hit, there was a hard break in price. It drove all the intraday trends down, albeit Unconfirmed (both the Trend and the rumor.) I hit the retracement back, i.e. liquidated my longs and went net short. The next thing I knew we were back to the top of the RRT. Now I was looking at two losses. I got stubborn and refused to take a short retracement back in the direction of my sell to get flat. Even though the Unconfirmed down trends disappeared, I was now trading against the Confirmed up trends I had originally used for the context of my initial long trade! This was clearly a Mistake. I wasn't going to let those (expletive deleted) get me! Well, they got me and a half an hour later when I finally got out, I was obviously counting more losses than if I had exited when I should have. Fortunately, I straightened things out quickly the following morning by buying the first retracement against a shallow Fibnode. The RRT was born!