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18 B BOM
I refer to slide 12.
I think I understand that the triangle, as it nears its apex, (BO likely within 5 to 10 bars) comes into BOM, as in fact it has nowhere else to go. But the slide than shows a parallel channel/range. It also says the probability of a reversal before reaching profit target is 50%, whereas normally in a TR 80% of breakout attempts fail. What parameters should I use to decide that a range within parallell lines is in BOM please?
BOM simply means Trading Range. Any time you have one reversal up and one reversal down, you have a trading range and the market is in Breakout mode.
On the 5 min chart the smallest trading range could be form by 2 bars. So any time you have a 2 bar reversal, that constitutes a trading range that is clearly seen on smaller time frame.
So the minimum parameters you need are two sideways opposite bars or one reversal up and one reversal down.
Thanks David K for your interest.
Not sure i follow, but I'll complete all of section 18 before pursuing this if I still need to at that point
I understand your confusion.Whenever the market is in a Trading Range (TR), the market is in BoM. This can be, as David K said, as small as a ii pattern, or a Triangle in this case.
80% of breakouts fail, which is also the case in this Triangle. It had 3 pushes down, and 2 pushes up, all failing to breakout of the Triangle. Finally it broke out to the upside, hence the ~80%. So keep this statistic in mind when price is still bouncing around between your trend lines and we're still forming the triangle.
50% chance 1st BO of TR will reverse. This is after the first BO of the Triangle has happened. So while we're still trading within the Triangle, you shouldn't be concerned with this statistic. Once we're breaking out, then you have to be aware that there is a 50/50 chance we might reverse.
Here, the first breakout did succeed, and once you've reached video 26 you will see that there is a MM target that would have been hit.
Good question, these statistics are a big part of the course. They will return in a lot of videos so it's important to get to know them well.
Thank you Michiel.