Poljot you never sent me any more charts so I cannot assign correct proper probability. I prefer assigning probability based upon the larger and immediate contexts. So, I really need more info. I like to use the trades equation. But to really do so effectively I need more info. Traders equation: (probability of success) x (Reward) greater than the (probability of failure) x the (risk). I like to see a positive traders equation before taking a position.
However, since I only have 1 chart to look at I will just take my best guess on what it will likely do based only upon the chart you sent. So, this is what I would do and also what I would do if my best guess is wrong.
It is either going to go up or down. So I would be prepared for either scenario. But I am biased towards upside. Basically you wanted to know up or down. But I will show what I will do in either scenario.
On the channel view or perspective:
If it opens near the bottom of the channel I am going long right away and adding on or averaging down if it moves against me. Then I will wait and exit for profits as it moves towards the middle or upper 1/3 of the channel, if reversing strongly. Why? 70% of the time BO’s out of the bottom of a bull channel fail and price trades back up into the channel. However, that means 30% of the time it will continue it’s move down. So I have to be ready for that too.
The higher probability based only upon the info you have provided is that it will reverse and head back up. However the market can do anything. If it opens near it’s close continues down After 5 or more bars that are overlapping meandering around but is staying below the bottom of the range then I will likely exit my longs with a loss wait for a move south, and on a PB double up short my previous position size, for a measured move down on a second or even third leg. Thus getting back my previous loss. If right after the open near it’s previous close it moves down south of the channel and does so swiftly with a big bear bar or two closing near their lows then I will not go immediately long but will get short immediately before any PB betting we will see more action south.
That first bar or two after the open gives me more info to make better decisions.
In summary, I am prepared for either scenario. But I will start with the long scenario first betting it will go back into the range and head north towards the middle. So, I will be taking long positions. This is, if it opens near it’s previous close. If it opens big gap down or up then I do no thing but wait to see where it is heading after the gap.
As concerns the RANGE perspective. It is trading at the close in the bottom 1/3 of the yellow range box. 80% of range BO attempts fail. It is attempting to go to the bottom of the range and BO. 20% of the time a BO attempt will succeed. So if it opens still in the 1/3 bottom of the range I am going long and adding (averaging down long) all the way down and thru the bottom of the range betting the BO will fail and price will go back into the range. I will then exit on any move towards the middle of the range that gives me a decent profit.
If it reaches before the bottom of the range and just Meanders around after 5 bars or so of it staying below the range I am likely gonna exit my longs and wait for an opportunity to double up and go short. Say on a PB after it moves a bit more south. If it just opens up in bottom 1/3 and blast thru on two or more big bear bars closing near their lows then I am exiting my longs with a loss and immediately doubling up short to get back my loss and quickly be back in profit.
That is the best analysis I can give with the single chart you have provided. In short, i am going with the 70% and 80% but know what I will do if it takes the least likely direction on the 20% or 30%. It is least likely that the BO south will succeed in either channel or range perspective. However, from the bull channel perspective I see bull channels as bear flags on a larger TF and when a Successful BO does succeed, it will likely be south. The latter two events would have me holding for a MM south on a doubled up position. However, like I said if it gaps in a big way, up or down, on the open I do nothing, take no position but just wait for more info.
I hope this is a real trading instrument and not some chart you just created and this all a game. I have no idea what the instrument is nor any idea of the time frame of the chart. You basically have not provided sufficient info for a better analysis.
So, if it is a real instrument let us know what happens and tell us what instrument it is and what time frame your chart is.
