Monday, April 9, 2012
First bar: Reversal bar
When the first bar is a reversal bar in a place where it does not make sense such as a bull bodied reversal bar above a gap or overlapping the prior day's range, there is a good chance it is a setup for failure. On the other hand, a bull reversal bar below a large gap will often begin a trend from the first bar.
When it fails to produce a trend from the first bar, chances are high that the day will turn into a trading range day. This means whenever there is a new breakout, you can look for a fBO trade is the range is large enough (4+points).
Occasionally, such a breakout gives a BP trade such as b26, which can be held often to the measured move of the opening range.