Quote from cnms2:
FBPs have the propensity to break down. The more bars in the FBP, the more so.
You clearly have a firm grasp of how to trade these methods, so I don't want this post to come off as condescending in any way. However, several problems exist here.
1. The formation isn't an FBP, its a Lateral Formation which began as a Symmetrical Pennant.
2. Your example and the chart example do not match. In the example you provided, we witness a continuation move down, as price moved into the formation from above. This is not the case with the chart example provided by callmate. In other words, the contexts of the two examples differ greatly.
3. As Tums pointed out, the Final Two Bars of this formation do not show decreasing red. Price closed exactly where it opened on each bar. Depending on the software used, these Last Two Bars may have shown Black Volume (to some traders) as the two bars closed above the prior bar's close.
4. Using words such as 'propensity' injects probability into the equation where none need exist. By definition, one cannot 'know' the next outcome based on probability alone. However, clues do exist in the chart above (some you've previously mentioned) which did allow you to know.
5. Context is key. Know the context, and one can know what must come next. Change the context, and the answer to what must come next, also changes.
In other words, the above points show, while people can arrive at the correct answer, they often do so for reasons other than they believe. To illustrate this point, I submit the following link:
link.
Read the instructions (Some of you
will have difficulty achieving what the instructions ask). In a post later tonight, I'll show how your brain captures information - even though you are consciously unaware of it doing so. Once I add the later post, you'll clearly see how your brain uses information which some of you may not even have realised existed, or if so, never felt important.
Good Trading to all.
- Spydertrader
