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Hi,
The topic title pretty much contains my question: Is therereally a 40% chance we'll get a reversal down plus a MM below the bottom of the Bull BO?
Shouldn't it be "40% chance we'll get a Bear Reversal to form a TR or a swing down for a MM below the bottom of the Bull BO"?
Otherwise, the math would be OK to Sell the Close of the Bull BO, which would probably not be a good idea at that point.
Thanks
We have a 40 percent chance of having a swing move to the bottom of the buy climax and having a reward equal to the risk. After that the market usually goes sideways and forms a double bottom, again the probability and reward is low because you are selling either near support or against a strong move.
I think these are two separate analyses, first you have a 40% chance of a swing to the climax bottom, and then a 40% chance of a swing below the double bottom that could be formed.
So the problem is that you have a 40% chance of a reward equal to the risk, and in these cases as you know, when the probability is low we should look for two times the risk.
Remember most of the time the probability will oscilates in the 40-60, the question is, do i will make 2x times my risk if a take the trade?
Yes, you could fade that second buy climax close, but you need at least two reasons to enter the trade, e.g. vaccum test of high time frame resistance, the biggest buy climaxes occurring late in bull trend.
Thank you.
That's what I was thinking. But that's not what Al is saying in the video. I can imagine it's not easy, making a hundred hours of video material without ever making an error. But on the other hand, I consider everything Al says as sacred. So I'm easily confused sometimes.
Hi Silent Willie,
I don't think Al misspoke; I just think he wasn't as clear as he normally is because the focus of the slide was a bullish case for a MM. His "MM move down" was just going back down to the bottom of the bull BO like you suspected. Which in a sense is a Measured Move - you either will have one that continues the bull trend or one that goes back to the beginning of the BO. Al just often uses different terminology to explain that reversal.
Hi Paul,
I now understand what the real probabilities are. Thanks for your contribution to that.
