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Hey all,
Sorry I can't refer to the exact video, although I'm sure its buried somewhere between 19-29. I skimmed through the wedge videos there but couldn't find it. So I'd appreciate it if someone can point to it here.
Anyways that's not my main question. Al mentions that there's a special type of wedge, a horizontal/slightly tilted one, called a small BO wedge if I remember correctly. The normal forces of wedges do not apply here in the sense that normally a sloped down wedge has 75% chance to break to the upside. But this small BO wedge, even though tilted to the downside, has at least 50% chance to break to the downside.
I never see Al mention this specific pattern anywhere else, even though it pretty common I think.
Can someone tell me more about this pattern? What exactly sets it apart from other wedges, except for its slope. Cause a lot of wedges breakout above/below the previous push right?
Much appreciated!
I think I know what you're referring to.
In a wedge you expect the two lines to be sloping in the same direction and converging, so for a bullish wedge - (Wedge bottom or wedge bull-flag - expected to reverse up) you'd expect both the upper and lower lines to be sloping down, and getting closer together. In this scenario there's a 75% chance of upside breakout.
If the lines are sloping in opposite directions, upper line pointing down, and lower line pointing up, then its not a wedge but a triangle, which is 50/50% for reversal or continuation.
I believe the niche situation you are referring to is that if the two lines are sloping in the same direction and converging like a wedge, but the line with the 3 pushes is nearly flat, then this should be considered a possible triangle, and you should apply a 50% probability when making a trade decision rather than 75%.
Thanks for replying. I finally found it. Somehow I've overlooked it searching for it the first time.
Its in 24E around 6:50. Al doesn't call it a triangle, but a horizontal wedge, but the forces are probably similar. However he does make a point of highlighting this specific pattern and focusing on the small BO below BO behaviour.
I think in summary I should just remember that horizontal channels/wedges/triangles are BOM and 50/50. And in this specific case, there might be more downside chance after there's a failed upside BO, like Al says. But I guess there's always more downside chance after a failed upside BO in general, regardless of any pattern :).
