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Hi,
My question is:
Why the probability of MM down here is 50% not 40%? Is it because at that moment, the price already reaching the start of bull BO? Wouldn’t the bottom of bull BO acts like a support level, so that the probability of MM down is less than 50%?
Probability of 50% is indicative of 0 edge, which is correct. Prices moved up, and now moved down to the beginning. Any initial strength the bulls initially had is gone.
Of interest to note though is that profits are often taken at 1:1 targets. This is reasonable if a trade can be taken at 1:1 if there is a 60% bias, which in this case, at that particular point there is not.
However, as prices moved downwards you will note the bear trending bar which closed below the doji. That is a breakout bar closing lower than the breakout and at that point moving forwards the probabilities have shifted and really is not 50% (or 50/50) anymore.
Thereafter, the 1:1 target becomes a potential reality. Potential.
Hopefully helpful and good trades to you!
Thanks for your answer Eric. it's very helpful!
also another note why its 50%, the BO below the buy climax converted the market into a TR. With the low and high of the TR being the low of the buy climax and the high of the buy climax. since its a TR, 50-50% of a successful BO up or down and a MM of the TR, which was the buy climax
.
Very insightful! Thanks for the note.
