Tuesday, January 10, 2012
Inside bar after BO bar
An inside bar right after a BO bar (b8, b37) often signals a failed breakout. A failed breakout does not automatically imply a trend move will setup, but since failures generally have at least two legs, a strong signal near a support such as b20 reversal bar at ema is an acceptable signal.
However, when the range is small, the market will often give a fBO or BP at the other end of the range as we saw at b37. This time it resulted in a complex pullback all the way to b67. One approach to maximizing fBO trades is to exit part on a strong push such as b17,b19 or b49 and exit the balance on any strong counter-trend signal such as b20 or b65.