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.
Cad,
ReplyDeleteWhy was your reason for taking the fBO trade at b6? It had a very poor signal bar, an inside bar reversal with the inside bar being a doji with a 2t tail and no signs of strength.
Thank you.
I'm a bit liberal about signal bars in the first hour. This is not because they are a higher probability, but the risk:reward ratio is usually good.
Deleteb6 was a very hard decision and would be lot easier if the signal bar was stronger. The strength of b1 two bull closes after it meant there was a high change of at least another attempt to break up.