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I have a question and would really appreciate your help. On slide 11 of video 18B of the fundamentals part, the title is "80% of TR Breakouts Fail: Except in BOM (BreakOut Mode)". On slide 5 of the following video (18C), the title of the slide is "TR is BOM: Equal chance of Bull and Bear Breakout". The question is: is every trading range in breakout mode or is there a specific situation in trading ranges that creates breakout mode?
Thank you in advance.
Hi Leo,
At first when trading ranges form and grow everyone is expecting to sell tops and buy bottoms and expect 80% of all BO attempts to fail. But eventually trading ranges reach a moment when breakout is expected.
Some situations could be:
- TTR lasting over 20 bars, suddenly most traders are expecting either a bear or bull BO to succeed with 50% probability
- approaching apex of a triangle, BO is inevitable, only in which direction nobody knows 🙂
- Trading The Open videos: BOM mode: some specific movements around first bar of day that lead to BOM mode (worth watching)
Hope that helped,
CH
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Thank you very much!
