A

Hitchhiker's Guide
TO THE

HISTOGRAMS

First things rst, dont panic. There is nothing normal or familiar

about histogram analysis. These arent pa erns that the banks
want anyone to learn how to read.the werent designed to be
discovered, so they are intrinsically not easy to understand. That
is so say, a room full of 4th graders couldnt trade using them. Its
an en#rely new language. So lets keep calm. Breathe.

Ive been reading histograms for over 8 yearsand have taught

them to over three thousand futures, forex, and equi#es traders.
Let me show you some things that will help you as a histogram
pilgrim be er understand how to use these tools. You can brag
at the water cooler tomorrow if you make it through these pages

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The 2 most basic histogram pa erns are shown here. If you

see a bump above the zero line with a #me stamp on top,
the histogram is warning you that SELLING PRESSURE is
probably coming at that #me in the future. If you see a
bump below the zero line with a #me stamp on the bo om,
the histogram is warning you that BUYING PRESSURE is
probably coming at that #me in the future.
Yeahmost people dont believe it at rst. I get it.

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The 3rd most basic histogram pa ern is a whippy combina#on of the
rst 2. If you see an area on the histogram chart where the bumps
appear above and below the line very quickly, theyre indica#ng there
will most likely be choppy price ac#on at that stretch of #me in the
future. The pa ern looks like an earthquake happened as someone
was drawing the histograms.or they drank too much coee.or will
really nervous about something.
I need to show you how this one works in a webinarits a freak, and
needs a few more minutes to explain. (theres 1 in every family)

There are 2 more pa erns. But theyre weird. Counter-intui#ve,

even. Well get to those later. Pa erns 4 and 5. (shiver)

For now, congratulate yourself. Youve learned something you

didnt know a few minutes ago. Thats huge. I feel like we should
celebrate, or at least take a moment to recognize that youre
awesome. Hmmmm. Great job.

Ok, lets keep moving. Youre not geAng any younger, you know.

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When you arrive at a PATTERN 2 selling pressure histogram

#me in the future, theres a few things we can expect pre y
regularly. At these #mes, banks usually try to push the market
down. That can mean a few dierent things based on market
condi#onsand I want to show you 2 dierent things to
watch for that come up the most frequently at these #mes.
Remember, the banks are slippery, sneaky bastardosso
some of this wont seem fair when you see what happens.
Youll be mad a li le when you see how they plan this all in
advance.

To beat them, we need to think like them.

Be the ball, Danny.

- Ty, Webb, Caddyshack

STOP RUN

The highest probability #mes will occuralign withthe local trend. I

use a 120 EMA to help me lterbut you can use whatever you want. If
the trend is DOWN when you arrive at a down #me, it usually falls like it
has a brick #ed to it. Some#mes, theyll even trip out stops in the
direc#on of the trend before they hammer retail traders down. Jerks.

A selling pressure #me in an uptrend can look a li le dierent. Will it

drop like a rock when theres a strong uptrend? It canbut usually it
does something dierent. I like to use a good analogy. Imagine your
house is on reor the neighbor you dont liketheir house is on re.
You rush over to help, and turn on their #ny garden house. It might stop
the re from spreading for a few minutes, but not for long. Same thing
here. Banks sell into uptrends (garden house) and price stops rising, or
rising as quickly. Some#mes aKer 3 or 4 bars, prices will break out and
keep rising. Market nerds call these re-accumula#on phases.

So, when you arrive at a selling pressure #methere are three

things to think about.

If the trend is downpre y good bet the market is going to drop

when we get to that #me.

If the trend is upwe can expect consolida#on...the market

slowing down or rising less quickly, with breakouts possible aKer
that slow down.

If theres no trendthe market is rangingselling pressure moves

will be as big as buying pressure moves, with banks #ming the
turns at the tops and bo oms of the established range.

If you can s#ll reachtake your arm and pat yourself on the back.
Youre doing great. Heres a gold star..

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When you arrive at a PATTERN 1 buying pressure histogram #me in
the future, theres a few things we can expect pre y regularly. At these
#mes, banks usually try to push the market UP. That can mean a few
dierent things based on market condi#onsand I want to show you
what to watch for - pa erns that come up the most frequently at these
#mes. The buying pa erns are pre y similar to the selling pa erns
just opposite.

At this point in your journeyyou now know things 99% of traders will
never learn, or refuse to believe exists. Youre a rebel.who knew?
I don't want to sell anything, buy anything, or process anything as a
career. I don't want to sell anything bought or processed, or buy
anything sold or processed, or process anything sold, bought, or
processed, or repair anything sold, bought, or processed. You know, as a
career, I don't want to do that. - Lloyd Dobler, Say Anything

The highest probability #mes will occuralign withthe local trend. I

use a 120 EMA to help me lterbut you can use whatever you want.
(DejaVu?) If the trend is UP when you arrive at a buying pressure #me,
it usually takes o like David Hasselhos career in the 80s. You should
also watch for stop runs around buying pressure #mes, because the
banks are s#ll jerks...nothings changed since a few pages ago.

A buying pressure #me in a downtrend can look a li le dierent. Will it

y up like a rocket when theres a strong downtrend? It canbut
usually it does something dierent. Same analogy as before with the
re (I may be a pyromaniac, now that I think about it). Banks buy into
downtrends and price stop falling, or stop falling as quickly.
Some#mes aKer 3 or 4 bars, prices will break out and keep falling.
Market nerds call these re-distribu#on phases. (Quite oKen, banks
will drive down through a former low and trip out stops just at a
buying pressure #me. )

Hey

You just learned 3 of the most common pa erns banks use to talk
to each otherthrough #me codes.

If we just stopped hereit would be fantas#c.

You can stop here if you want. Its just you reading this, and no one
would know. Well, you would know, but thats besides the point.
No one apart from you, anyway. You can stop here, have some ice
cream...maybe soda, or pop. Or cookies, everyone loves cookies.

There are 2 more pa ernsthings Ive learned and taught other

over achievers like you. When youre done with your cookies,
come back here and keep reading. These next 2 are going to
require a li le extra blood sugar to process, so get them in your
belly before proceeding.

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Now, when you get to a selling pressure #me, it should go

down, or stop going up as quickly, right? Most of the #me,
yes. But some#mes, the banks pull a fast one. They get to a
new high faster than they thought they would, and they buy
instead of sell. (Gann called these Inversions. But dead
people used big complicated words to explain stu).

How can you tell when that happens?

Its all about loca#on loca#on loca#on.
When there is a prior swing lowa structural lowand the
selling pressure #me barthe one to the leKor the one to
the right, breaks that barwe expect a pullback or full on
reversal UP at that #me. The next page is the pa ern Im
talking about.

As youre tracking the market, watch for big down moves.

Those moves will usually drive through prior swing lows. If
the selling pressure #mewithin one bar to the leK or right,
breaks that lowbody, candle wick, whateverexpect, or be
alert to the possibility of a reversal in the opposite direc#on.

Well call this Pa ern 4. Its weirdI know.

This one took me 5 years to discover. 5.

2
1

3
PRIOR SWING LOW

That was really weird, right?

But heres the thingthis is a new language, based on TIME. Its

hard learning new languages. The placement of the word in
CONTEXT is important. In this case the word is selling pressure.
In the context of structure, market structure, that word can mean
the opposite of what it normally means.

YeahI know.

This pa ern has an evil twinits the same pa ern, but with
buying pressure.

This is the last pa ern I want you to learn. AKer this, well go to
the park or something and walk around. Feed the birdsmaybe go
to the beach. Everyone likes the beach.

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Now, when you get to a buying pressure #me, it should go up,
or stop going down as quickly, right? Most of the #me, yes.
But some#mes, - well heck, we just covered this. Some#mes
in the context of structure, it can do the opposite. Or, that is #
say, we can expect the possibility of the opposite happening.
Its all about loca#on rela#ve to market structure. Highs and
lows. Lows and highs. In this case, highs. Not the Jamaican
kind the pivot kind.
When there is a prior swing higha structural highand the
buying pressure #me barand/or the one to the leKor the
one to the right, breaks that barwe expect a pullback or
full on reversal down at that #me. The next page is the
pa ern Im talking about.

As youre tracking the market, watch for big fast holy crap up moves.
The candles will move with velocity. Youll feel very excited about
taking a long. That urge is usually the pre-cursor to this #me pa ern. It
will smash through prior structure highs, and right at the buy pressure
#me.hammer trapped longs down.

Well call this Pa ern 5. Not very original name. S#ll weirdI know.

This one took me 5 years to discover. 5 and a few minutes, cause I

found 4 rst, and this one second right aKer. (if were being accurate)

Heyyou made it.

You learned the 5 #me pa erns that banks use to talk to each other.
Maybe youre not an expert at this pointlike dont start puAng this
on your resume when you apply for jobs and stucause if they test
you on ityoull probably mess it up and blame me, and then we
stop sending Christmas cards to each other and stuthe kids start
asking why Mike doesnt come around at the holidays and youre like
all, Beats me?! but they know be er cause kids are really smart
and pick up things. Dont do that, because, you knowthe kids.

Youre not an expert yetbut Ill confess youre star#ng to get this.
(Im ridiculously proud of you). As we follow the histograms each
weekuse this as a guide. Dont take live trades or anythingbut
follow along. Mark up your charts with dots at the #mesand see
for yourself this is happening. Most people follow for 2 weeks
maxand cant take it anymore. They see what the banks have been
doing to them all these yearsand its not okay. Its not.

I can teach you this new language. Ive taught 3,000 people how to
speak itand every day we all get uent in bank, together. Their
edge against us gets a li le duller. The playing eld levels out a li le
more to our side. And those are all Martha Stewart Good Things. If
you get really crazy -maybe we could take this to the next level. Be all
Client and Vendor-y together. Its up to you. No pressure.