Channel Surfing

because it should stand out li ke a sore thumb. It should also show clear
signs of reversing off its extreme high or low. The bar must indicate that
it wants to retrace the entire move made by this spike. So you want to see
some type of smaller reversal develop that indicates the extreme move is
over. In any event, be cautious of any prior highs or lows set earlier by a
market. If this bar breaks a major high or low it can have a tendency to
continue the move rather than reverse off of it. So never attempt this at
major resistance or support zones.
Third, price should reverse immediately off of this bar. This entry should
have no delay and each succeeding bar should exhibit a clear change in
direction. Aside from the possibility of a spike that is composed of two
bars rather than one, no other bar should be equal to, much less exceed
it. Any questionable action on the part of price should have you exiting
in post haste. Because it requires the ability to recognize a number of
factors, beginners should avoid this entry altogether. It should only be
attempted by experienced traders who understand the subtleties of market
action. Normally you should avoid high-risk trades, but if done right th is
particular entry can offer some powerful returns.

Inside Entry
An inside entry takes something from both of the previous entries. Like
the conservative approach, the entry is signaled with the break of the
inside channel line. But like the aggressive approach, you are entering as
soon as the break occurs rather than waiting for price bars to close beyond
that line.
The rule for an inside entry is as fol lows:

Enter as soon as an inside channel line is broken.

So as soon as the inside channel line is broken you enter in the direction of
the break. I sometimes refer to this as a passively aggressive entry, which
fits very well but is a term too lengthy to use often. Figure 1-9 shows how
the entry is signaled.

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