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16E Wedge Top
Hello, just have a quick question about video 16E at about 11:30 minutes into the video Al talks about wedge tops and a 50% chance of failure after a break above that wedge top in a bull channel. I am confused about this since later on in the video he is talking about a 25% chance of success and 75% chance of failure of breakouts in channels (which sometimes are wedges). There is something I'm missing here. If someone could help me find my thinking error here, I would greatly appreciate it.
Thanks, and Happy Trading 😊
The difference is between "attempts" and actual breakouts. According to BPA 75% of BO attempts fail. A bull attempt is any move to the upside that either makes a HH, DT or even a LH and reverts back down. A BO is a strong move that closes beyond a prior swing high and may even have FT and may even start to channel higher and still it's 50% that this BO will fail. That's how hard it is to defeat market inertia.
Hope that helps,
OK that makes more sense now! The probability of an attempt at a pattern is different from the probability of the pattern actually working out. Thanks!