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What factors make this a high Probability sell?
I am seeing 2.5/ 3 pushes down, and the prior 2 bull bars closed some gaps, although a 50% PB favors bears.
Al is implying that if you sell at the red box and use a wide stop (top of major lower high), the odds are the market will go down 1x initial risk before it hits your stop.
If one sold the red box and the market went sideways for a couple of bars (not in a bear micro channel as it did here), that would begin to lower the probability of lower prices and make the market closer to neutral.
Selling below the red box is a high-probability trade, but one has to know when to get out and how to manage the trade. High probability means bad risk/reward (1x risk/reward is bad), which means you must keep your probability high. This means you must know when to get out (when the probability gets lower than 60%.
Al is saying it is high probability because it is in a bear trend, and the market is always in short. Sure the bulls got two consecutive bull bars right before the red box, but that is not enough to reverse the overall trend.
Al is saying it is high probability because it is in a bear trend, and the market is always in short. Sure the bulls got two consecutive bull bars right before the red box, but that is not enough to reverse the overall trend.
The 2 main bear legs look strong. And a 50% PB + great reversal/signal bar are positive signs for the bears.
However, a few concerns are:
*The bottom looks like 3 pushes down or a MDB (middle) +2 larger DBs.
*Bulls closed a Gap.
*HL, but nothing major. (Is that a L2/L3 PB? Bull channel Bear flag?)
*Big Up, Big Down, then 20+ bars smaller sideways action.
Considering the bull case, is it that bad to sell the reversal, but use a tight stop above the 50% PB?
