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In his channel videos, Al says "If there’s a BO out of a channel, up or down for any direction, there's about a 70% chance that the BO will fail and reverse and go to the opposite side of the channel within about 5 bars.". He also says "When you do get a BO above or below a channel, the BO usually fails within about 5 bars 75% of the time.". I also know that 75% of Bull channels = bull flags thing. So, I'm confused because both of the 1st 2 statements sound like they're saying the same, but have different percentages.
Another clarification is "In a Trading Range there's a 50% chance that the 1st Breakout attempt will fail, it'll reverse.", but the 80% rule says "80% of Breakout attempts fail." So does this mean, it's only 80% on all breakout attempts after the 1st attempt, so the 2nd and onwards.
Thanks
Welcome!
The percentages are excellent markers and should be taken as "weighted evidence" but not necessarily specific percentages. As channels are not as strong as spikes, they have less momentum, and traders are buying lower and selling at the highs. This creates the channels formation so it is simply a reinforcement of what trading activity is happening. Since traders are selling some position at the highs of the patterns (bull pattern), there is a lower probability of successfully breaking upwards significantly (est 25%). So, when prices break above a channel, they are most often expected to return within the channel within 5 bars (on the highest timeframe the pattern appears).
The 80% is a little different. This relates to inertia and simply says the market has a bias to continue to do what it has been doing. In a trend, trend continuation is expected (80%). In trading ranges, most breakouts will fail (80%).
Hopefully helpful and good trades to you!
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