The Ross Hook is the technical formation that occurs in trending markets where there is a failure of the market to make a new high in an uptrend or a new low in a downtrend. The Ross Hook must occur after a 1-2-3 trend reversal formation has taken place.
NOTE: The 1-2-3 formation is
printed to the chart AFTER the full formation has
been identified. IT IS THE "3" THAT IS THE OPERATIVE
PIECE OF THE PUZZLE.
Key Features
The Ross Hook looks like points or small peaks on a chart. Typically in trending markets, there will be a strong move in the direction of the trend and then a round of profit taking. This forms Ross Hooks on a chart.
The Ross Hook is the bar on the chart at the point where prices peaked. The trading method states that you will buy a breakout of the high point in up-trending markets and sell a breakout of the lowest point in down-trending markets.
An attractive feature to Ross Hooks is that you are trading with the trend. This strategy may be prone to false breakouts, but the market still tends to have a decent pop on false breakouts.
Ross recommends trading multiple contracts and taking profits at different levels. This way, you can hopefully cover your costs at the first level, lock in a profit on your second level and set yourself up for capturing a big run on the third level. Ross mentions that about 2 out of every 10 of the Ross Hook trades results in a big move.
