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14C slide21
14C slide27
Contradictory ideas:
"Only Trade with the Trend"
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There's a 75% chance of an Opposite Breakout.
?
Yes but Al multiple times talks about how markets have inertia and that inertia is the basis of trading.
He says:
"The market is always either in a Trend or a Trading Range, and 80% of reversal attempts in a trend fail, and 80% of breakouts of trading ranges fail"
Al is saying to trade with the trend, as 80% of reversal attempts will fail
He is also saying, on the 20% chance a reversal attempt of the bull trend does succeed, whenever that eventually happens, the breakout of the channel structure will be a counter trend breakout, as opposed to a bull breakout of a bull channel, as trends to get weaker over time.
He is technically saying that bull channels rarely have a strong bull breakout, only about 20% of the time, 80% of the time the structure will weaken into a broader bull channel, a trading range, or a reversal
So to summarize in a memorizable format:
In a Trend, 80% of all Breakouts fail. 20% of the time, there is a 75% chance of a Bear Breakout.
Yeah sounds about right
Regarding Channels, say you have support and resistance lines running through a newly formed channel. Which takes president? The Channel lines or the S/R?
