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I get it when a buy signal bar open below prior bar close, there are trapped bear traders fuelling the BO. And since most bars open at prior close, does it means that if a signal bar open above prior close(which suggest buying pressure), it actually lowers the probability of a successful BO? Does this applies in tight/broad bull channel, middle and even the top of a TR?
I wonder the usefulness of such things, because as I see it... on a 5 minute chart, you need more than bulls buying at the ask in order for the next bar to open a tick higher — you need to have perfectly timed finishing off all buyers at a given price at the end of the bar, and then the first order after the new bar starts happen to be a buy order. The other alternative is that all remaining bears at the close price decided in unison, at the perfect time, to withdraw their orders.
Perhaps one institution decided to put in a large buy limit order at the ask to ensure that all sell orders got filled at that tick right at the last second (or less) of the 5 minute bar. And then the fastest computer connection got a buy in for the first trade of the new bar. But do we know that is what is really happening?
Is some form of buying pressure I guess... but we already see the buying pressure due to price moving up... thus, the perfect timing required to get a gap up on the open of the bar I'd guess is more about luck than something intentional... though I would also have to say that the chance of that happening is greater when there is buying pressure.
Point is, with so many market participants buying/selling at the same time, I wouldn't put too much weight on a minor detail like that. Probably best to ignore such things on an intraday chart for a liquid market and just focus on other indications of strength and on context. Of course, if you have extensive data/experience to support basing actions on such indications, then by all means, go for it.
Doesn't that make a signal bar opening above prior close higher probability with good context(pic example/ maybe in bottom of a TR), and why does Al specifically exclude it?
Oh，thanks for this topic, I got the exact same confuse too. The only acceptable answer for me is this bar traps more bears.
If you or anyone see this topic have a better answer, please reply me, thank you!
