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In this slide Al says if there is a higher high after the bear breakout the bull trend might reverse, which it does.
Is this a high probability scenario that a broadening channel will likely reverse?
What would be the dynamics behind it?
Hi Sascha,
As far as I understood this is a major trend reversal and it can also be seen as expanding triangle. But regardless of the naming, upon BO to the downside price might test the previous HH and even shoot above it. If that happens we're waiting for a proper sell signal (1st sell signal has less chance of success), which would be a second bear bar below the very top, or we can enter on the 2nd sell signal which would be big bear candle (6 candles later).
But in any case the chance that reversal will happen under these conditions is about 40%.
I hope this answers your question.
