Quote from riskfreetrading:
I will state the method, and give the reasons of the naming later. This applies to indices (not stocks), and price actions such as what NDX did today at the close:
1. If index (NDX) closes at high of day trading range, and close to a flat or decreasing daily bollinger band, short the index.
2. Cover sometime tomorrow on the assumption that the next bar (tomorrow) will have its low shadowed by the body of todays bar.
What do you think are the chances of this simple trading system to show profits tomorrow?
I shorted NDX (via some vehicles) when it was at 2032 at today's close, based on the reasoning above. How much do you think I will lose or gain tomorrow, and what are my chances?
The name came because of some ET members led by (HolyGrail) who think selling the top of a day is always a bad proposition, and that one should always buy at the close when the day high is at the close. My view is that it is not true with an index closing near a bollinger band when the latter is is flat or decreasing recently.