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If there is a strong trend bar on the open followed by a decent FT bar in OK context, is there then a 60% chance of MM? I ask because Al says 50% of moves on the open have a major reversal, no matter how strong, and this doesn't align with a 60% chance of a MM? 😀
Hy Niels,
in my opinion i would say no.
Because AL is talking about the 1st bar of the day had a chance of 20% to be the high or low of the day.
If the first bar of the day is a strong trendbar it is a 30% that this bar is the H or L of the day.
In the first five bars or so the market had a 50% chance that the high of the day is made.
Do not forget that trends from the open only occurs a few times a month, this makes chances lower.
If there is a Gap the chances for a trend are better, the bigger the gap the bigger the chances for a trend. Big gap up - the chances for a bull trend are 60% the chances for a bear 40%, the trend can go in either direction.
If you take a look at the open pattern there are three outcomes after the first spike, bar or Gap, these are trend continuation, a breakout pullback setup or a trend reversal.
if im not wrong most of the time the market is setting up a trend reversal. The first few bars often look bretty strong. For example three strong bull bars - the market is in a trend from the open at this moment, but the question is will the trend from the open (these three bars) fail or suceed, most of the time it fails and becomes a Reversal, a few times it suceed and trend the rest od the day. other days it will from a trading range.
So i might was wrong in my first quote where is said "in my opinion i would say no". Because in your example the market is in a trend from the open, but the more important question is will it suceed or fail.
Often the failure happens on some MM or support an ressistance level and then creates a spike in the other direction. If you follow this second spike i would say you have a 60% chance of a MM up, in a bull for example.
But i personally did not research this type of your question especialy trends from the open, so i only can tell what AL is teaching about situations like that and how i understand his content.
Best regards.
